Reliance Power and Kakinada Seaports along with Royal Dutch Shell will jointly set up a liquefied natural gas terminal on India's east coast to meet local gas demand, the companies said in a joint statement.
The terminal will help Reliance Power, controlled by billionaire Anil Ambani, secure fuel supplies for its 2,400 megawatt (MW) gas-fired project at Samalkot in Andhra Pradesh.
Reliance's plant and another 5,000 MW power project are almost ready in India but can't operate because of a local gas shortage.
India's gas-based plants are facing uncertainty over supply as output from the D6 block off India's east coast operated by Reliance Industries has sharply declined, forcing power producers to look for substitutes.
The joint venture company plans to set up an LNG terminal with an initial capacity of up to 5 million tonnes per annum by 2014 at Kakinada deepwater port in Andhra Pradesh, the statement said. Kakinada Seaports operates the Kakinada deepwater port.
Shell already controls and operates LNG import terminal in Gujarat.
The statement didn't disclose the stake of each partner or the proposed investment in setting up the LNG terminal.