Staff Reporter

Gas likely to be available by 2012

Government yet to decide on pricing of LNG

LNG terminal coming up on Puthuvype

KOCHI: As it awaits the availability of LNG in Kochi, the public sector Fertilizers and Chemicals Travancore Limited (FACT) is keeping its fingers crossed over the issue of gas pricing, a government policy on which is still awaited.

As per the current schedule, LNG should be available in Kochi by 2012 when Petronet LNG commissions its 2.5-MMTPA (million metric tonne per annum) LNG receiving and re-gasification terminal.

However, FACT’s future profitability and hope of using the new fuel to open up a more prosperous future hinge on the price of LNG.

There will be sharp differences in the cost of production between companies using natural gas and LNG. How the government will view this cost difference is a crucial issue, said the company’s director of finance K. Mathevan Pillai here on Wednesday.

He told The Hindu that the difference of price between natural gas and LNG was quite sharp, with LNG coming at thrice the cost of natural gas.

Mr. Pillai expressed optimism that the government would soon work out a means to reconcile this issue.

The nutrition-based subsidy programme for fertilizers may need to be worked on to ensure that fertilizer companies using LNG as feedstock are compensated.

The LNG receiving and re-gasification facility in Kochi is coming up on 40 ha of land allotted by the Cochin Port Trust on Puthuvype and has provision for expansion up to five MMTPA.

FACT has been identified along with National Thermal Power Corporation’s generation facility in Kayamkulam as the two key consumers LNG from the Kochi terminal.

FACT’s LNG requirement is put at 0.32 million tonnes a year.

Conversion work

Meanwhile, FACT expects to start its conversion work soon to meet the LNG availability deadline. Mr. Pillai said that study for a detailed project report (DPR) is under way and that the conversion work was expected to be completed in about a year’s time. The conversion work is expected to cost around Rs. 20 crore.

He said that together with conversion from naphtha to LNG, the company was looking to enhance productivity by 20 per cent.

The DPR study includes this aspect and also the latest technology induction. The changes are expected to push up ammonia production from the current level of 990 tonnes to 1,220 tonnes.