An in-principle agreement has been reached to resolve the peculiar situation where two reputed international companies are interested in constructing the first Floating LNG Storage Regasification Unit (FSRU) in the East Coast at Kakinada Deepwater Port.

The AP Gas Distribution Company had tied up with the GDF Suez LNG UK Ltd., as its strategic partner through international bidding and signed an MoU with Kakinada Seaport Ltd., the concessionaire of the Kakinada Deepwater Port for the execution of the Rs.5,000-crore project in May this year.

However, the State government later realised that the Royal Dutch Shell, Europe’s largest oil company, had also been working on building a floating LNG of up to five million tonne per annum capacity off Kakinada. Since two projects in the same location were not viable, a meeting was held in New Delhi recently where it was tentatively agreed to involve both the multinationals.

Minister for Infrastructure Ganta Srinivasa Rao said the issue was cleared by Chief Minister N. Kiran Kumar Reddy who ordered a Special Purpose Vehicle to be constituted for executing the unit.


Meanwhile, sources said that it had been agreed that the public sector APGDC would have 44 per cent stake in the floating terminal project, Shell and GDF Suez would have 30 per cent and 26 per cent stake respectively and the Kakinada Seaport Ltd., three per cent.

The meeting also reviewed pending issues related to Petronet LNG project at Gangavaram port, a joint venture project between Petronet and the Gangavaram Port Ltd. The Rs. 5,000-crore project would have initial capacity of five million tonnes per year. The gas to be supplied by the floating terminals to power and fertilizer plants would generate Rs.5,000 crore revenue annually to the State through VAT, Mr. Srinivasa Rao said.

The Chief Minister asked the officials to convene a coordination meeting within 10 days to resolve all the pending issues for the key I&I projects including Machilipatnam port and Chittoor drinking water project.

In-principle agreement has been reached with the two international firms for the FSRU at Kakinada Deepwater Port