The Kochi terminal in Kerala is expected to promote a shift in India from conventional fuels such as petrol, diesel and naphtha to LNG. Petronet is India's largest importer of liquid gas.
About 123,000 cubic meters of LNG had arrived, Petronet said in a statement Sunday.
The LNG terminal, the country's fourth, will initially operate at about 8 percent of its annual capacity of 5 million tons as the facility has just two customers, the BPCL Refinery, and a fertilizer and chemical manufacturing company, both in Kochi. At full capacity, Kerala could reap as much as $78 million from taxes on the LNG sold.
When the LNG shipment arrived at the terminal last week, Petronet LNG Ltd. Chairman A.K. Balyan told reporters the landing price for the LNG for customers would be $14.5 per million metric British thermal units excluding taxes, transportation charges and customs fees, noting that the fall in the rupee would also affect the price.
But Indian Oil Minister Veerappa Moily has said customers are accustomed to the Indian government's fixed prices of $4-$5 per mmBtu.
Making LNG a cheaper comparable fuel option "is a great task," the minister told an international energy conference in June. Still, Moily said India aims to import up to 20 million tons a year of LNG.
The New Indian Express newspaper reported Friday that the facility's two customers still did not have a clear-cut idea about the cost of the LNG.
The delivery of the LNG also highlights the delay of the second phase of the terminal, a 600-mile pipeline intended to pass through the states of Kerala, Karnataka and Tamil Nadu. Phase I, involving 27 miles of pipeline, had already been commissioned.
Balyan said that just 18 miles of the 600-mile pipeline necessary for Phase 2 had been laid, India's Business Standard newspaper reported Monday.
He noted that the project is facing opposition from land owners in Kerala and Tamil Nadu. The Tamil Nadu government is also opposing land acquisitions, and the issue is now under judicial review. He said he expects the laying of pipes to be completed in six to seven months after the issue is resolved.
Balyan told the Standard the Kochi terminal would receive gas from Australia not before mid-2015 because the delay in installing the pipeline means restricted imports.
An unnamed Petronet senior officer likened the delay to "driving a brand new car in first gear only."