OREANDA-NEWS. April 20, 2011. Petronet LNG, India's biggest gas importer, is eyeing the Sri Lanka . market, planning a new terminal on the east coast and aims to double imports of the fuel as its braces for serious competition from the proposed gas marketing joint venture of global major BP and Reliance Industries .

At 9:40 am, shares of Petronet LNG were trading 2.48% at Rs 136.10 on the Bombay Stock Exchange. Petronet, which set up India's first LNG terminal about a decade ago, also plans to sell gas using cryogenic trucks directly to consumers in regions not connected by pipelines of GAIL India, one of its promoters, to boost profitability of the company, the company's managing director and CEO AK Balyan told ET.

"Our board has approved a strategic vision for the company. It includes direct marketing to customers in regions without interfering with the marketing arrangements of our promoters," he said. Its promoters are gas transmission firm GAIL India, explorer Oil and Natural Gas Corp and refiners Indian Oil Corp and Bharat Petroleum Corp Ltd - each with a 12.5% stake, while GDF Suez, Europe's largest LNG importer is the strategic partner with a 10% stake.

Petronet's new initiatives come at a time when BP has bought stakes in 23 blocks of Reliance and decided to set up a 50:50 joint venture for sourcing and marketing natural gas in India. BP's global presence and access to large gas reserves including LNG, together with Reliance's strong domestic presence is expected to pose a serious challenge for existing players such as Petronet.

Balyan said the vast gas market in India was likely to remain short-supplied, giving enough room for more players to operate in the country. He said demand was likely to far exceed supply for a long time. Petronet is upbeat about expanding into new markets such as Sri Lanka. "We have request from Sri Lanka. We are looking at the opportunity ," he said, adding that Petronet's upcoming Kochi terminal was strategically located to serve the promising new market.

The company targets to double its liquefied natural gas (LNG) business in next five years from current about 8 million tonne per annum by expanding existing infrastructure and adding new capacities, he said. To cater to future demand, Petronet has decided to set up a 2.5 million tonne LNG terminal in the east cost with an investment of USD 1.5 billion, he said.

It has already engaged a consultant to find a suitable location to build the east coast's first LNG terminal. "The consultant will submit its report by the end of this month. But, 2.5 million tonne initial capacity is ideal for optimal utilisation of infrastructure," he said. He said that the project could be commissioned in 36-40 months given company's prior experience.

Petronet has already operating a 10 million tonne per annum capacity LNG facility at Dahej in Gujarat. But the company has 7.5 million tonne per annum long-term assured supply for the terminal from Qatar. Petronet has been able to operate almost 9.5 million tonne volume from its Dahej terminal last month through LNG purchased in spot market and plans to expand the capacity further.

It is investing Rs 936 crore to set up a second jetty for the facility and expending its storage facilities with an investment of USD 150 million that would help it in expending terminal capacity by 2.5 million tonne annually. The jetty project, which will be ready by 2013, will entertain bigger LNG cargoes and also help in anchoring two ships at a time.

The company has already decided to double the capacity of its second terminal at Kochi to 5 million tonne per annum. "We are implementing both phases simultaneously and hope to complete the facility by 2012-13. Abut 72% work is already complete," Mr Balyan said.

Petronet is also planning to direct market LNG as auto fuel in cryogenic containers, set up stand-alone gas stations in highways and waterways where pipeline-lines are not available. "Our entry in direct marketing will be subject to meeting requirements of our long-term bulk consumers," Mr Balyan said. Most of Petronet's bulk consumers are its promoters.