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Home >Industry >Energy >Petronet drops plans to buy stake in GSPC’s Mundra LNG terminal

New Delhi: Petronet LNG Ltd has dropped plans to buy 25% stake in Gujarat State Petroleum Corporation Ltd’s (GSPC) almost-complete Rs4,500-crore Mundra LNG import terminal in Gujarat to allow its promoter Indian Oil Corp. Ltd to pick a larger stake, a company official said.

Indian Oil has been talking to GSPC for almost two years now for acquiring 50% stake in the 5-million-tonne a year Mundra LNG import terminal. Petronet, India’s biggest gas importer, entered the fray earlier this year. It is keen on buying a stake in Indian Oil’s under-construction 5mt-a-year LNG import facility at Ennore in Tamil Nadu.

“We have decided not to pursue Mundra as our promoter firm IOC is more interested," the official, who wished not to be named, said. In lieu of letting go Mundra, Petronet wants IOC to give it 25% stake in the Ennore terminal. “For us, Ennore is more strategically important as we already have two terminals on the west coast—Dahej in Gujarat and Kochi in Kerala. Talks on Ennore are on," he said.

GSPC first offered its 50% stake in the Mundra project to IOC, but the company was willing to take not more than 25-26%. So, GSPC opened talks with Petronet for selling 25% stake. But now, Indian Oil is willing to look at a higher stake. The Adani group holds 25% interest in the LNG import terminal. Petronet operates a 15-mt a year LNG import facility at Dahej in Gujarat and has another 5-mt a year terminal at Kochi in Kerala.

IOC, the country’s largest oil company, is looking to build the 5-mt a year LNG import terminal at Ennore in Tamil Nadu by 2018-end. Besides the Dahej LNG import facility of Petronet, Gujarat has another 5-mt terminal of Shell at Hazira.

Initially, GSPC was to hold 50% stake in the Mundra LNG terminal and Adani 25%. The remaining 25% was to be offered to a strategic partner. IOC as also India Gas Solutions Pvt Ltd—the equal JV between the Mukesh Ambani-led Reliance Industries Ltd and Europe’s second-largest oil firm BP Plc—and state-owned Oil and Natural Gas Corporation Ltd (ONGC) were short-listed to pick 25% stake earmarked for the strategic partner in the project.

GSPC is looking at a partner which can bring in LNG or consume the imported liquid gas, people familiar with the matter said. The Mundra terminal, which is to be financed in a debt to equity ratio of 70:30, is expandable up to 10 mt per annum in the near future.

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