Shell Energy ties up with Inox India for LNG delivery at doorstep
Royal Dutch Shell’s Indian arm Shell Energy India Private has signed a pact with Inox India for door-step delivery of liquified natural gas (LNG) from its terminal in Gujarat through road to customers who are not connected to pipelines.
Shell Energy owns and operates an LNG terminal in Hazira, which has a capacity of five million tonne per annum. INOX India, which specialises in cryogenic liquid storage, distribution and re-gasification solutions, will create distribution infrastructure, including logistics and receiving facilities to deliver LNG from this unit to customers.
“We will together work on developing a larger market for LNG in India. We will focus on the automotive sector to promote LNG as a transport fuel for long-haul heavy-duty trucks and buses. Our second focus area will be hydrocarbon-based industry, where we would help LPG users convert to LNG, which is cleaner and cheaper,” Siddharth Jain, executive director, Inox India, told ET.
Typically, LNG is gassified at terminals and supplied through pipelines, which operate at high pressure. The door-step delivery model will reduce the dependence on pipelines and give companies access to a larger market. Power and fertiliser units are increasingly using LNG as natural gas availability remains muted.
“There is a growing demand for gas, the cleanest-burning fossil fuel, from the city gas distribution sector, commercial and industrial customers and as a fuel for heavyduty transport. We are excited to explore this new segment and develop other such partnerships which will enable us to continue playing a key role in meeting India’s longterm need for more and cleaner energy,” Ashwani Dudeja, country head, Shell Energy India, said in a statement.
Inox, under its brand ‘GoLNG’, has a fleet of 20 transport tankers that have collectively logged more than 6.5 million kilometres and distributed around 100,000 tonnes of LNG, primarily from state-run oil marketing companies, to its consumers spread all over the country. With the tie-up with Shell, it aims to scale up this capacity.
“We will initially start with at least 300,000 tonnes per annum and ramp that up to at least a million tonnes per annum. We are already in talks with potential customers and we hope to have confirmed contracts in the next 3-6 months,” Jain said.
Under the arrangement, a customer would have two agreements — one with Shell Energy for buying LNG, the other with Inox for getting the LNG using its network, referred to as “virtual pipeline.
Energy majors are looking at door-step delivery of fuel to expand their market and overcome infrastructure models. On one hand, bigger players like Reliance IndustriesNSE -6.79 % and state run-OMCs are eyeing this segment, on the other, there are startups, which have entered this space, primarily for sale of diesel.
The Economic Times 18-03-2020