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Business News/ Companies / GAIL plans menthol unit in Russia; eyes Egypt, China markets
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GAIL plans menthol unit in Russia; eyes Egypt, China markets

GAIL plans menthol unit in Russia; eyes Egypt, China markets

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New Delhi: The government-run gas pipeline infrastructure company, GAIL (India) Ltd, plans to expand its presence in Russia, Egypt and China, said a top official. In Russia, the company plans to set up a menthol project along with ITERA Oil and Gas Company.

“They (Russia’s ITERA) have come up with a proposal for setting up a menthol plant in Russia. We are conducting due diligence," said U.D. Choubey, GAIL’s chairman and managing director.

GAIL also plans to raise its stake in Shell’s Fayum Gas Co. S.A.E. (FGC) in Egypt to benefit from the opportunities in the local gas distribution market. GAIL has 19% stake in FGC.

It is looking at finalizing the cities in China in which it will partner with China Gas Holding Ltd, or CGHL, for setting up city gas distribution networks, he added. GAIL has a 10% equity stake in CGHL.

“We will have joint ventures (CGHL) for some cities (in China). Forty-nine cities have been given to CGHL. Depending upon the viability of the cities, we will be finalizing the cities where we want to form such joint ventures," Choubey said. He, didn’t disclose details such as size of the projects or investment.

GAIL has a memorandum of understanding with ITERA for project cooperation and a strategic alliance with Shell’s two firms in Egypt involved in retailing CNG—FGC and Compressed Natural Gas Egypt S.A.E., or SCNGE. GAIL has a 22% equity participation in SCNGE.

The company has lined up a capital expenditure of Rs25,000 crore by 2012 and will invest Rs18,000 crore in the next four years to extend its pipeline network to 12,600km from the current 7,000km.

Questions emailed to ITERA and to Shell’s Netherland media relations office remained unanswered. CGHL spokesperson couldn’t be contacted.

Commenting on the proposed investments, Choubey said, “It is not something to be worried about as we have a cash reserve of Rs14,000 crore and have been earning profits of around Rs4000 crore every year."

“Investment in developing countries with need for energy infrastructure provide good opportunity for companies such as GAIL, specially on the back of support they receive owing to sustained local performance projections," said Deepak Mahurkar, associate director, oil and gas industry practice, at PricewaterhouseCoopers.

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ABOUT THE AUTHOR
Utpal Bhaskar
"Utpal Bhaskar leads Mint's policy and economy coverage. He is part of Mint’s launch team, which he joined as a staff writer in 2006. Widely cited by authors and think-tanks, he has reported extensively on the intersection of India’s policy, polity and corporate space.
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Published: 12 Apr 2009, 10:05 PM IST
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