$1 Billion floating LNG terminal to come up at Kakinada.

Dow Jones newswires reports that Kakinada Seaport will build- along with Royal Dutch Shell PLC and Reliance Power Ltd- a dedicated floating liquefied natural gas terminal at Kakinada in Andhra Pradesh.  Quoting company sources, the agency says that the capacity of the terminal, when completed, will be 5.0 million-tons-a-year. Shell and Reliance Power together hold a majority stake in the consortium, with Kakinada Seaports the minority partner.

Expected to be operational in two years by 2014, the terminal will cost $1 billion and compete with quite a few other LNG terminals that are being planned elsewhere in the country.  The capacity of the Kakinada Seaport LNG terminal may be doubled later, Reliance Power says.  The company will benefit even more from the project because it will get access to LNG for its upcoming 2.4 GW power project in Andhra Pradesh.

Shell is already in a partnership with Total SA in India, operating the Hazira terminal with a capacity of 3.6 million tons- to be expanded to 5.0 million tons later. Many local and international players are eyeing the market in the energy deficient country, looking to exploit demand that is expected to grow considerably on the back of increasing domestic and industrial LNG requirements, particularly from the power, petrochemical and refinery sectors.

 The country's present LNG import capacity is expected to skyrocket more than four times in the next five years- from about 13.5 million tons today to 50 million tons by 2017; many power projects are stuck because of the present severe LNG shortage. The fuel crunch has also forced the government to advise local power companies not to plan domestic gas-based projects until March 2016, Dow Jones reports.