A consortium of energy-to-transport majors, including the Adani group, the Gujarat State Petroleum Corporation (GSPC) and Essar Oil, plans to spend Rs10,000 crore to build an LNG re-gasification terminal at Mundra in Gujarat.

The 10 million tonnes per annum (mtpa) terminal is likely to come up alongside the Mundra port and facilitate the movement of LNG ships into the terminal, with an announcement regarding this likely soon - according to Rajeev Sharma, CEO of Adani Group.

“We are still in the process of working out how much stake each of the companies will hold in the project,” Sharma said.

“We are talking to various countries in the Gulf region,” Sharma added.

However, analysts note that considering the tight LNG supply across the world, it may be forced to buy LNG from the spot market. Spot LNG is currently trading at $14-16 per million British thermal unit (mBtu), while long-term LNG contracts range from $4 per mBtu to $8 per mBtu.

Sharma said 2009 would be a good time to seal long-term LNG contracts as there was likely to be spare supply in the global markets then, with a few gas liquefaction plants coming up across the world. The proposed LNG terminal will be the third LNG re-gasification terminal in the country. The other two operational terminals are the Petronet LNG-run terminal at Dahej and the Shell India terminal at Hazira, both in Gujarat.

Meanwhile, two other LNG re-gasification terminals are under implementation. The terminal at Dabhol in Maharashtra is being built by Ratnagiri Gas & Power, the operators of the power plant at Dabhol, and the other terminal at Kochi is being constructed by Petronet LNG. Neither Petronet nor Ratnagiri has been able to tie up long-term LNG contracts for their upcoming terminals.