India’s AMNS in talks to build Suvali LNG terminal

Market: Natural gas
18/12/24

Indian steel manufacturer ArcelorMittal Nippon Steel (AMNS) is in advanced talks to build a 5mn t/yr LNG import terminal at Suvali, Surat city, in India's western state of Gujarat, a source close to the matter told Argus.

The terminal will be part of its plan to build a new captive port at Suvali which would handle 60mn t of bulk cargoes and finished goods, the source added. The firm has yet to announce the timeline for the terminal and the port. It received environmental clearance in 2023.

The LNG terminal is being built in response to higher regasification charges, pipeline tariffs and storage fares at Shell's 5mn t/yr Hazira facility, the source said. Shell's 5mn t/yr LNG terminal charges one of the highest regasification rates in the world at $0.75/mn Btu, industry sources said. The Suvali terminal will be located 10km from Shell's 5mn t/yr Hazira LNG terminal.

AMNS has reduced its imports to Hazira terminal with no deliveries in 2023 and 2024 compared with 12 cargoes totalling 820,483t received in 2022, data from market intelligence firm Kpler show. The firm only received nine LNG cargoes at Dahej this year totalling 596,000t, Kpler data show. AMNS has largely stopped using Shell's Hazira terminal, only using one slot in 2024 as compared to around 10-16 slots every year previously, the source said. Petronet's 17.5mn t/yr Dahej import terminal provides more than 30 days of free storage, while Hazira provides only 16 days, the source added. A slot refers to utilisation of an LNG cargo from its evacuation to regasification facility.

AMNS is likely to invest a total of $1.95bn to build the Suvali terminal. It will have two LNG storage tanks, a sea-water based regasification unit, pumps and cryogenic piping with pipelines to supply regasified LNG to AMNS' 9mn t/yr crude steel plant. The terminal will be designed to handle LNG carriers with capacities of 20,000-26,5000m³, the source added.

But it remains to be seen if this will materialise as it will be in competition with several LNG terminals in close proximity, including GSPC's 5mn t/yr Mundra LNG terminal and HPCL's upcoming 5mn t/yr Chhara LNG terminal in Gujarat.

Further terminal plans

Adani Ports and Special Economic Zone (APSEZ) also has plans to expand the capacity of its Hazira port and may even consider setting up an LNG facility as the port currently handles bulk cargoes, liquid chemicals, and oil products.

India currently has seven operational LNG terminals with a combined capacity of 47.7mn t/yr, with the highest utilisation in Petronet at 103pc during April-October, followed by Shell's Hazira at 44pc. Utilisation in other terminals remains in a nominal range of 20-35pc, an oil ministry report shows. This is due to lack of a breakwater facility or weak pipeline connectivity from terminals to end users.

India's state-controlled gas distributor Gail has bought a total of 25 slots equating to 1.5mn t/yr of LNG at Shell's Hazira LNG terminal for 2025, prompting speculation that its 5mn t/yr Dabhol LNG terminal might not be operational for the whole of next year, another source told Argus.

Gail was planning to operate the Dabhol LNG facility at full capacity throughout the year from 2025 as it has resumed construction on its breakwater facility after a monsoon this year, director of finance Rakesh Kumar Jain said in an investor call on 31 July.

The construction of the breakwater facility has been delayed since 2022 because of conflicts with local communities.

By Rituparna Ghosh

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