H-Energy to start west coast LNG terminal in May 2018

India`s H-Energy Pvt Ltd, a unit of real estate group Hiranandani, will start operations at its liquefied natural gas (LNG) terminal in Maharashtra state by May 2018, its chief executive said on Wednesday.

India plans to raise the share of natural gas in its energy mix to 15 percent in three years from the current 6.5 percent, according to a plan set out by Prime Minister Narendra Modi`s government.

H-Energy has invested 17 billion rupees ($261 million) to build its 4 million tonnes per annum (mtpa) regassification terminal near the Jaigarh port in the state, Darshan Hiranandani told Reuters.

LNG, a super-cooled natural gas, is imported in liquid form and is regassified at the terminals for supplies to end users.

"We have already laid a 60 kilometre pipeline connecting our plant to the Jaigarh port," Hiranandani said, adding his firm would initially import spot cargoes to make the super cooled fuel affordable to price sensitive Indian customers.

The global market is currently flooded with cheap LNG with many suppliers queuing up to sell volumes to India on a spot basis, a senior gas consultant said.

Average spot LNG price for October delivery stood at $8.08 per million British thermal units (mmBtu), according to a note issued by brokerage Emkay Global.

The company aims to expand the plant to 10 mtpa, Hiranandani said.

Before embarking on the next phase of expansion, the CEO said the company wanted to first build a 600 kilometre pipeline to connect its plant to the southern city of Mangalore.

H-Energy is among the three companies in India which will be adding LNG capacity to a gas-hungry nation in 2018. The other two projects are a 5 mtpa terminal at Ennore on the eastern coast and a 5 mtpa terminal at Mundra in Gujarat in the west.

H-Energy is also building another LNG terminal off the coast of Kolkata in the Bay of Bengal. The construction for that 2 mtpa plant will begin next year, said Hiranandani.

($1 = 65.0875 Indian rupees)

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