India's ONGC moves on Powergen

India's ONGC moves on Powergen

London (Platts International Gas Report)--20May2004


India's Oil and Natural Gas Corp (ONGC) is preparing to enter the commercial 
natural gas fired power generation business. About 4,000MW capacity has been 
proposed initially. 

"We are planning to move further downstream and take up power generation on a 
commercial basis. We are, however, not interested in transmission and 
distribution of power," said ONGC Chairman and MD Subir Raha.

ONGC last year bought majority equity in an oil refinery, marking its entry 
into the downstream business. The first two power locations identified are 
Dahej in Gujarat state and Mangalore in Karnataka. A 'special economic zone' 
being promoted by ONGC close to Dahej port is to house a 2,000MW power plant.

The company is a promoter of the Dahej LNG terminal owned by Petronet LNG Ltd 
(PLL), which started commercial supplies of LNG-converted gas early last 
month.

Starting with 2.5-mil mt/yr capacity this year, LNG deliveries are to rise to
5-mil mt/yr subsequently, under a 25-year deal with Rasgas of Qatar. But
studies are under way for expansion of the terminal to 10-mil mt/yr. That is
where ONGC would fit in to source gas for its power project.

At Mangalore, a power town, it may link with PLL to set up an LNG import 
terminal which would feed another 2,000MW power plant there, as well as a 
proposed petrochemical complex to go with a refinery owned by ONGC subsidiary 
Mangalore Refinery & Petrochemicals Ltd.

Power plants are also to be set up at gas wellheads where transportation 
through pipelines is not commercially viable. Where there are no gas users, it
is economic to convert gas to power and deliver to consumers through a cable 
network rather than laying a gasline to the users' location, which is not cost
effective, according to Raha.

Power generation will not be a new activity for ONGC, which already has about 
1,000MW captive generation, with a 100MW or so surplus fed into the grid.
But it now wants power generation to become a commercial activity. "In the 
future, we will sell the generated power to trading companies like Power 
Trading Corp, or even to direct consumers through contracts," said Raha.

This story was published in Platts International Gas Report

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