IOC in talks to buy GSPC's stake in Mundra LNG terminal

Gujarat State Petroleum Corp has offered 50% stake in Mundra LNG import terminal to IOC

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 five million tonnes a year terminal project, which is likely to be completed

by 2017. It has offered its 50 per cent 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 the 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 per cent.

GSPC LNG, a unit of GSPC, holds 50 per cent interest in the project. Adani Group holds 25 per cent

while the remaining 25 per cent is to be bid to a strategic partner.

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 per cent 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.

NGS INDIA