Adani Total's Dhamra LNG Terminal Will Achieve Peak Capacity By 2024, Says CEO

Satinder Pal Singh: Adani Total Pvt.'s Dhamra LNG terminal is designed to import, store, re-gasify and safely send out up to 6.5 million tonne per annum in this current initial phase.

At this time, we have two users in the form of Indian Oil Corp. and GAIL India Ltd., who have substantially subscribed capacity on a long-term basis.

Both users will source LNG and market gas for their captive and third-party use. IOCL has its refineries at Paradip, Haldia, Barauni, and Guwahati. The revival of brownfield fertiliser plants in Sindri, Barauni and Gorakhpur will act as consumption centres. Also, industries and city gas distribution companies in the region will be supplied from Dhamra by the users. As this is the only terminal in east India, all eastern demand for LNG will be met most efficiently from this terminal.

Satinder Pal Singh: The commissioning cargo was sourced by TotalEnergies and was supplied by Qatargas. Subsequently, our users—IOCL and GAIL—have sourced cargoes from Qatar, Oman, Nigeria and the U.S. The users have a wide portfolio of upstream LNG supplies that can be used to bring to Dhamra from several projects internationally. Our terminal is compatible to receive most LNG vessels delivering LNG globally and we have been vetted by most major international LNG players.

Satinder Pal Singh: The commissioning cargo arrived on April 1. The first commercial cargo arrived on May 22, 2023. The terminal, once commissioned, is equipped to perform at peak capacity. However, operating at the peak capacity requires sufficient sourcing and downstream evacuation by users. We expect that when connectivity to all major consumption centres will be completed by end of 2024—operating at full capacity is anticipated around that time.

Satinder Pal Singh: Volatility in spot prices has had an impact on LNG consumption in the last two years. However, the recent softening of international spot LNG prices has helped in revival of demand.

We expect international prices to remain stable, which should result in a significant increase in demand on the east coast. However, we also expect that India Inc. will look to tie up LNG supply on a long-term basis—this is crucial to help move India towards a gas-driven economy, helping achieve the Honourable Prime Minister’s vision of having 15% of primary energy requirement met by gas and moving to net zero greenhouse gases by 2070.

The east coast has been devoid of any gas so far and the Dhamra LNG terminal will help meet the latent demand for gas in the region. With access to the cross-country grid and unification of tariff initiatives by the government, we will see the LNG/gas being consumed in industrial sectors, which were previously catered by alternate fossil fuels.

Satinder Pal Singh: We don’t market LNG from Dhamra. However, it may be noted that most of the LNG imported into India is via long-term/medium-term contracts, which are imported at 11-13% slope of crude (Brent), whereas the energy equivalent of LNG is at around 17% slope to Brent. This clearly demonstrates that LNG is competitive to alternate liquid fuels. To add to this, LNG burns more efficiently and has no chance of adulteration, making it the more competitive across the value chain.

Satinder Pal Singh: The request to add Dhamra on the gas exchange has already been made with the regulator, and we expect Dhamra to become “Delivery Point“ for the users to sell their inventory if they need.

Satinder Pal Singh: LNG has been widely agreed as the transition fuel from the traditional fossil fuels to renewables in the future. It is safe to say that LNG will continue to remain the key fuel for the next couple of decades and key factor for India to achieve 15% of natural gas share in primary energy mix by 2030. To achieve the mentioned target, India will require to increase the re-gasification capacity by 40-60 mtpa by 2030.

Further, LNG is required to diversify India's energy mix and contribute to our net zero transition. Natural gas has been the fastest growing fossil fuel globally for the last couple of decades and with new liquefaction plants likely to become operational by 2026 in Qatar, U.S. and Australia, we can expect that the same will have a positive impact for a major importer like India.

As per an India Energy Outlook report (2021) published by the International Energy Association, India’s total primary energy demand in 2019 was 921 million tonne of oil equivalent (mtoe), in which the share of natural gas was 55 mtoe. This primary energy demand is estimated to escalate to 1,237 mtoe by 2030, and if India is to achieve the 15% natural gas share, demand would triple to 186 mtoe. To put this in perspective, investments in natural gas storage and transportation of the order of Rs 1,20,000 crore would be required in the next 10 years to help achieve this target.