IOC in talks to buy GSPC's stake in Mundra LNG terminal
Indian Oil Corporation (IOC) is in talks to buy debt-laden Gujarat State Petroleum Corp's (GPSC) stake in the under-construction Rs 4,500 crore Mundra LNG import terminal in Gujarat.
New Delhi: Indian Oil Corporation (IOC) is in talks to buy debt-laden Gujarat State Petroleum Corp's (GPSC) stake in the under-construction Rs 4,500 crore Mundra LNG import terminal in Gujarat.
GSPC is looking to exit the 5 million tonnes a year LNG import terminal project, which is likely to be completed by mid-2017. It has offered its 50 percent stake in the terminal to IOC, sources privy to the development said.
With a view to expand its gas business, IOC is keen to buy a stake in Mundra terminal but does not want GSPC to exit the project completely.
IOC, the country's largest oil company, wants the state government entity to remain as a part of the project for smooth operations, sources said.
The terminal is not connected with any pipeline for shipping gas to consumers. To lay a pipeline to the nearest grid, it would require state government support and with GSPC on board, it could be done easily, according to IOC.
Sources also said IOC is keen to take half of GSPC stake and wants the Gujarat government entity to keep the remaining 25 percent.
GSPC LNG - a unit of GSPC - holds 50 percent interest in the project. Adani Group holds 25 percent while the remaining 25 percent is to be bid to a strategic partner, the shortlist of which also included IOC.
It will be selling 5 million tonnes a year LNG terminal together with storage and re-gasification facilities over an area of 28 hectares on the coast.
India Gas Solutions Pvt Ltd - the equal joint venture between the Mukesh Ambani-led Reliance Industries and Europe's second largest oil firm BP - and state-owned Oil and Natural Gas Corp (ONGC) are the other two firms shortlisted to pick up 25 percent stake earmarked for the strategic partner in the project.
Initially, eight firms including state gas utility GAIL India had expressed interest to buy the stake but only three were finalised.
Essentially, GSPC was looking at a partner which can bring in LNG or can consume the imported liquid gas, sources said.
While BP is a producer and trader of LNG, RIL's twin refineries at Jamnagar in Gujarat as well as its large petrochemical plants are huge consumers of gas. ONGC also is a big consumer of the fuel.
IOC too has large requirement of gas at its oil refineries. The company also markets gas to users.
Besides the three, other firms which had expressed interest included Petronet LNG, Torrent Energy, Japan's Mitsui & Co and Toyota Tsusho, sources said.
Mundra terminal, which is to be financed in a debt to equity ratio of 70:30, is expandable up to 10 million tonnes per annum in near future.