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Until just a few years ago, large parts of India were under-supplied by natural gas infrastructure. While the country has over 5,700 kilometres of coastline that can accommodate terminals to import the fuel, these facilities were concentrated in Gujarat, in the northwest.
This is where state-owned energy company IndianOil saw an opportunity to better supply the population with liquid natural gas (LNG), which the government has identified as a key fuel in the transition towards achieving net zero emissions by 2070.
In 2015, the company founded a subsidiary called IndianOil LNG Private Limited (IOLPL), with the aim of building a new terminal.
“Our ambition has always been to create and manage world-class LNG infrastructure.”
“The Indian market, as far as the natural gas is concerned, was concentrated in the north and west, while the southern part and the eastern coast was deprived of natural gas,” says Debasish Nanda, IndianOil’s Executive Director (Gas) and a member of IOLPL’s board. “IndianOil made a very strategic decision to come up with an LNG terminal in the southern part of the country.”
The company established the terminal in Ennore, a suburb in Chennai, Tamil Nadu, with construction starting in 2015 and reaching completion in 2019. “Our ambition has always been to create and manage world-class LNG infrastructure,” Debasish says. “That means we import and store LNG, and deliver re-gasified LNG on an uninterrupted basis, reliably and safely, to customers.”
The reliability of supply to customers is central to the company’s operations. “When you are getting natural gas to your home, you do not want any interruptions,” Debasish says.
Debasish has worked for IndianOil for nearly 34 years, and first moved into its natural gas operations in 2008.
He joined the company as a management trainee, then worked in engineering before taking a role marketing lubricants. After 11 years in the marketing division, he was hand-picked for a business development assignment that involved establishing an export market for the company’s Servo lubricants, setting up offices in Sri Lanka, Dubai and Mauritius.
“I was the first person to be associated with the export of bulk bitumen from India, and base oil from India to Pakistan,” he says. “We exported bitumen to China, Malaysia, Bangladesh, Hong Kong, and we exported base oil to Pakistan for the first time during my tenure.”
“When you are getting natural gas to your home, you do not want any interruptions”
IndianOil first got into natural gas in 2004, and when Debasish joined four years later, the company was still in the process of getting to know the industry.
“IndianOil neither had domestic gas in its kitty nor infrastructure, so we were starting fresh,” he says. “Everybody knew IndianOil because we have the word oil in our name, and everybody thought, ‘How can IndianOil offer gas?’ The challenge was to create awareness among customers that, yes, IndianOil is there to meet all kinds of energy requirements, including natural gas. That’s how I started.”
In 2008, the company was handling roughly 1.6 million tonnes of LNG. Today, that figure has risen to five million, and Debasish is now laying the groundwork to achieve volumes of around 20 million tonnes by 2030. “I have put strong fundamentals in place,” he says.
For Debasish, three things are of paramount importance in the natural gas business: availability, accessibility and affordability.
“Anywhere you want to market gas, you first have to make it available there, and then you must have your pipeline infrastructure to move the natural gas from the supply location to the distribution point or the consumption point. And then, yes, it has to be affordable,” he says.
With those three goals at the forefront of his plans, Debasish also strives to develop employees to their full potential while maintaining the highest standards of business ethics. The company is aiming to be one of the key energy providers in India while continuously improving on its operational performance and maximising shareholder value and customer satisfaction.
These aims are based on IndianOil’s visions and values, which Debasish summarises like this: “To broaden its horizon, to expand across new vistas, and to infuse new-age dynamism among its employees.”
IOLPL has been awarded a bid to build a 1,240 kilometre pipeline through Tamil Nadu, into the southern part of Andhra Pradesh, and then into the eastern part of Karnataka. This presents the young company with an exciting challenge – one that Debasish is confident it can rise to.
“Everybody knew IndianOil because we have the word oil in our name, and everybody thought, ‘How can IndianOil offer gas?’”
“Right now, I think we have got only 25 kilometres of that pipeline working, but we are planning to finish the entire pipeline network by the end of 2022,” he says. “These are our challenges, but we are doing extremely well. Out of all the LNG terminals in India, I think ours has come up in the shortest possible time. And in a very short time, we have already reached quite a utilisation number, as far as the terminal is concerned. We have already got approval for expanding this LNG terminal from a capacity of five million tonnes to 10 million. We are moving forward, and by 2025 or 2026, we will have this terminal operating at 10-million tonne capacity.”
The Ennore LNG terminal gives IOLPL first-mover advantage in the region. By investing in nurturing the LNG import market in the south and east, the company stands to benefit in the long-term by carving out a place for itself as a key national supplier of the fuel. This is also in line with the parent company’s commitment to India’s Sustainable Development Goals (SDGs).
“What SDG number seven says is to ensure access to affordable, reliable, sustainable and modern energy for all,” Debasish says. “We want to give people this particular source of energy, which is going to act as a transition in our path towards achieving net zero emissions. We want very much to be part of this transition.”
While carving out this role for itself in the energy transition, IOLPL is seeking to differentiate itself from competitors by building a reputation as a reliable, steady, dependable supplier of natural gas.
“We want to give our customers confidence,” Debasish says. “Our first mantra is to earn the customers’ trust, and we have been successful because in our own modest way, we have been able to meet their requirements, even during the most challenging times.”
After the COVID-19 crisis hit, the company’s commitment to dependability was tested by rising fuel prices and lockdowns, but it managed to supply all of its customers without interruptions while keeping its prices affordable.
“We are trying to create trust in the minds of our customers that here is one supplier who, no matter what happens, will meet their energy requirements.”
“We supplied their full requirements, even when the price fluctuations were there. Even when the prices went up to US$56 per MMBTU, we were able to supply them gas at an affordable price through our long-term contracts,” Debasish says, referring to an acronym that stands for Metric Million British Thermal Unit, a standard unit of measurement for natural gas.
Showing up for customers and demonstrating affordability and reliability will do more for IOLPL’s reputation than any marketing can alone, he adds. “In short, we are trying to create a brand. We are trying to create trust in the minds of our customers that here is one supplier who, no matter what happens, will meet their energy requirements. We are trying to give that confidence to the customers.
“While doing so, we are also trying to maintain the highest standard of operations in our LNG terminal. I mean, safety has been of paramount importance. Even during the COVID-19 days when we were working hard to maintain uninterrupted supplies, we saw to it that the health and safety of all our employees was our first priority. We maintained a balance and we achieved our goals.”
Just as the company works tirelessly to serve its customers reliably, it expects any partners it works with to deliver on its promises consistently.
“It is very important for a natural gas company dealing with LNG to maintain cordial, harmonic business relationships and win–win partnerships along the entire value chain. Natural gas is a value chain-driven business,” Debasish says.
From the suppliers of the gas and shipping partners to the terminal operator, the pipeline operator and the final customers, it is vital that everything remains in sync, with close collaboration between stakeholders, in order for IOLPL’s operations to run smoothly.
“If there’s any interruption in one of these links, the entire business model gets disrupted,” Debasish says. “If my supplier fails to supply, the entire value chain gets affected. Similarly, if there’s some interruption with the shipping company, or the terminal link company, or the pipeline company for that matter, the end customer whose entire business depends on natural gas gets affected.”
“We want to give people this particular source of energy, which is going to act as a transition in our path towards achieving net zero emissions.”
One of the best ways to avoid such disruption and keep the entire value chain working in harmony is to have long-term contracts, which help ensure a steady stream of supplies from upstream by giving IOLPL’s partners security and peace of mind about the relationship. “We also have shipping companies with long-term contracts,” Debasish says.
Finally, the company has long-term contracts with its customers, which guarantees it a revenue stream it can use to plan far ahead, while giving the customers the benefit of reliably stable prices.
“There is a harmony here that ultimately results in achieving the goal of getting the natural gas to the consumer at an affordable price year-round, without any interruptions, to ensure that their energy requirements are met,” Debasish says.
Because India does not have an abundance of its own natural gas, international suppliers are vital to the company’s operations. “We are not blessed with enough domestic gas to meet our natural gas requirements,” Debasish says. “We are left with no choice but to depend on global suppliers who bridge the supply-demand gap. So we need to develop relationships with global suppliers that have the depth and the reserves necessary.”
Because those relationships are so important, IOLPL carries out extensive due diligence before entering a relationship with a new international supplier and only moves forward if it is convinced of the supplier’s capability over the long-term. “Since our energy security is tied up with certain suppliers for a number of years, we make sure they are reliable and that we get the contracts right,” he says.
On top of ensuring that each contract is with the right supplier, Debasish mitigates the risk further by having two or three long-term partners who supply the bulk of the company’s needs, securing the rest of the gas from other sources as needed.
“When I’m looking at my terminal, it’s always better to have two to three long-term suppliers who would meet 60–65 per cent of the requirements,” he says. “For the remaining 30–35 per cent, you can always dive into the market and look at whichever suppliers meet your requirements in the short-term. It is essential to have a balanced portfolio and a balanced approach among suppliers. You can’t put all your eggs in one basket.”
“Discipline is very important. Being on time, maintaining your schedule – these are very important. Of course, at the same time, a little bit of flexibility here and there is also vital.”
While Debasish takes a rigorous approach to maintaining the value chain and holds his suppliers to high ethical and business standards, he also recognises that rigidity and inflexibility can be limiting.
“Discipline is very important. Being on time, maintaining your schedule – these are very important,” he says. “Of course, at the same time, a little bit of flexibility here and there is also vital. We would like to deal with the large operators who can give us that flexibility, too – who can help us out during challenging times.”