To set up a floating storage and re-gasification unit in offshore Andhra Pradesh

Andhra Pradesh Gas Distribution Corporation Ltd. (APGDC), jointly promoted by GAIL Gas Ltd. (GGL) and Andhra Pradesh Gas Infrastructure Corporation Pvt. Ltd. (APGIC), on Tuesday, entered into a project framework agreement (PFA) with GDF Suez LNG UK Ltd. for jointly setting up a floating storage and re-gasification unit (FSRU) in offshore Andhra Pradesh.

The PFA was signed in the presence of Petroleum and Natural Gas Minister Jaipal Reddy, Andhra Pradesh Chief Minister N. Kiran Kumar Reddy, GAIL (India) Chairman B.C. Tripathi, GDF Suez LNG UK CEO and President Philip Olivier and other senior officials here.

Speaking on the occasion, Mr. Jaipal Reddy said GAIL (India) was expected to deliver the project expeditiously and called for focussing on early project-related clearances. He said the project would help Andhra Pradesh, which was experiencing acute gas scarcity.

He urged the Andhra Chief Minister to revisit the sales tax on gas and reduce the same as Andhra levied sales tax at 14.5 per cent besides the sales tax charged by Gujarat at18 per cent on RLNG.

Mr. Kiran Kumar Reddy, while emplacing the need for availability of more gas, wanted that the project to be commissioned at the earliest since critical sectors such as power and other industries were facing a huge short fall of gas.

The PFA, APGDC and GDF Suez would jointly conduct a feasibility study and target commissioning of the FSRU project by the end of 2013. APGDC has been mandated to establish an LNG import facility off the coast of Andhra Pradesh so as to narrow the gap between demand and supply position and in the context of restricted availability of gas in Andhra Pradesh and consequential under-utilisation of infrastructure especially in the power sector. The implementation of the FSRU project assumes significance as the same can be set up in a relatively short period as compared to a conventional land-based terminal.

GDF Suez is the Europe's largest importer of LNG and is well diversified along the entire hydrocarbon value chain, covering upstream E&P, LNG liquefaction, LNG shipping, LNG re-gasification, pipelines and city gas distribution. FSRU is a fast track and low cost solution for LNG import, no such project exists in India so far and very few such projects are there in the world.

To induct partner

To implement the project efficiently and effectively, APGDC has decided to induct a strategic partner, who has prior experience of developing such projects and would provide technical expertise for the project.