Mumbai Port signs deal to build new LNG terminal

Mumbai Port Trust has inked a license agreement with the SP Armada Clean Energy Ventures Private Limited (SPACEVPL) to design, build and operate a Floating Storage and Regasification Unit (FSRU) in Mumbai Harbor. The company will be operating and maintaining the FSRU infrastructure in Mumbai harbor for the next 30 years.

Shapoorji Pallonji Oil and Gas Private Limited owns 51% of the SP Armada Clean Energy Ventures whereas the wholly-owned subsidiary of Malaysia's Bumi Armada Berhad, Bumi Armada Netherlands owns the rest of the stakes.

Getting in line with the Government of India’s policy of increasing the LNG share in the energy mix of the economy, the port authorities in India are working on the development of new LNG terminals. There are five LNG terminals on the west coast of India, namely Hazira, Dahej, Dabhol, Kochi, and Jaigarh. The proposed Mumbai terminal will be the sixth LNG terminal on the west coast of India.

Mumbai Port Trust is keen on tapping the growth opportunities associated with the increased market demand for natural gas on the west coast of India. SP Armada Clean Energy Ventures will be developing the new LNG terminal in Mumbai Harbor on a Design, Build, Finance, Operate and Transfer (DBFOT) model taking the public-private-partnership route. In this partnership, the land license model will be followed wherein the water area charges are set based on the land policy of the given port. As per the Ministry guidelines, the total license rental for the license period has to be paid upfront.

An official with the Ministry of Ports, Shipping, and Waterway said that LNG imports will be rising in the future as the growing domestic demand for LNG cannot be met with limited LNG resources in the country. He further added that to support the import, infrastructure development will be required and FSRUs within the port limit offer fast track, flexible, and low-risk options in comparison to traditional onshore LNG terminals.

Want to know more about LNG in maritime shipping? Find a cost-benefit analysis of LNG as an alternative fuel on our blog.

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