Reliance Power Ltd. by Indian billionaire Anil Ambani and global energy giant Royal Dutch Shell Plc are reportedly mulling to put up what could become India's first east-coast liquefied natural gas (LNG) terminal.

According to The Economic Times India, the two companies have been holding discussions and negotiations to jointly build the LNG terminal that will fuel factories and power plants in the east coast.

Citing unnamed sources, The Economic Times India reported the project may cost $560 million.

Shell and Reliance Power will create a joint venture (JV) for an LNG terminal at Kakinada. Kakinada Port may also be offered a minority stake in the proposed JV, according to an unidentified industry official.

"The port is considered to be an ideal location for setting up an LNG import terminal due to its modern infrastructure, all-weather operations and proximity to gas consumers in Andhra Pradesh," The Economic Times India quoted the official as saying.

Shell operates an LNG terminal on the west coast in Hazira, Gujarat. Its initial capacity of 2.5 million tonnes per annum (mtpa) is being enlarged to 5 mtpa. However, east coast Indian customers may not buy the additional capacity due to local taxes and high transportation charges.

Several LNG companies have studied building a terminal on the east coast, including Petronet LNG, India's biggest gas importer.

The absence of an LNG terminal in India's east coast could derail the country's power projects of 7,000 mw total capacity. This includes Reliance Power's Samalkot project. Local gas is limited and insufficient in India. Importing LNG from existing facilities on the west coast is not economically viable, The Economic Times India said.