Abstract

Liquefied Natural Gas (LNG) Infrastructure and

Projects-

Feasibility and Projections

by

SUMIT AGGARWAL

The Indian economy presently is believed to have established itself on a healthy growth
path (more than 7% GDP growth rate) and this would increase the energy consumption in
the country. This increase in consumption is expected to be supplemented by an alteration
in the Primary Energy Mix of India on account of the substitution of oil by natural
gas.

The supply of natural gas is likely to increase in future with the help of increase in
domestic gas production and imported Liquefied Natural Gas (LNG). However, the
expected increase in domestic production at present is significantly lower than earlier
projections due to a steady reduction in gas output from the Krishna Godavari Dhirubhai
6 KG D6 field; whereas, the capacity of Re-gasified Liquefied Natural Gas (RLNG)
terminals in India is expected to increase from 17.3 mmtpa in 2012-13 to 83 mmtpa by
2029-30 assuming all the existing and planned terminals in India would materialize.
Thus, having established heavy reliance on LNG for meeting Indias energy needs, it
becomes all the more imperative to establish the necessary ways and means of
installing LNG establishments in the country.

The LNG industry is based largely on a series of virtually self contained projects made up
of interlinking chains of large scale facilities, requiring huge capital investments,
bounded together by complex long term contracts and subjected to intense oversight by
multinational organizations.

This study report focused on feasibility of LNG projects in INDIA and at the same
time established a frame work financial and operational model that may be followed
based on financial projections. For this purpose the capacity of re-gasification unit was
first analyzed and selected, followed by financial model development. The viability of
developed financial model was checked with respect to parameters such as Internal Rate
of Return (IRR), DSCR and Re-gasification charges which were subsequently equated
with other infrastructure projects in the country. From commercial perspective, the study
focused on key features relevant to lenders.

i
ii