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Indian Oil to buy up to 50% stake in Adani GSPC LNG terminal in Mundra

LiveMint logoLiveMint 04-08-2017 Gireesh Chandra Prasad

Nee Delhi: State-owned refiner Indian Oil Corp. Ltd said on Friday that it has decided to acquire up to 50% equity in a 5 million tonne liquefied natural gas (LNG) terminal being set up at Mundra port in Gujarat by a joint venture between Adani Enterprises Ltd and Gujarat State Petroleum Corp (GSPC).

Indian Oil did not specify the deal value. Considering that typically 30% of the cost of infrastructure projects are financed by equity and the rest by debt, the acquisition of up to a 50% stake in the Rs5,040 crore LNG terminal could cost the refiner at least Rs756 crore (half the equity portion of the cost).

“A fresh valuation of the project is being done for the transaction,” said an Indian Oil official who spoke on condition of anonymity.

The joint venture, Gujarat State Petronet Ltd (GSPL), is expected to complete the construction of the terminal by the end of the current financial year, Indian Oil said in a statement, conveying the decision of its board of directors.

Besides acquiring a stake in the project, Indian Oil is also booking LNG import capacity in the facility.

The terminal will be capable of receiving, storing and re-gasifying LNG and will be connected to GSPL’s existing pipeline network at Anjar in Gujarat, the refiner said.

State-owned and private oil and gas companies are spending on exploration as well as on gas import facilities and cross-country pipelines in a bid to raise the share of gas in the country’s primary energy mix (comprising crude oil, gas and coal) from 6% now to about 15% by 2030. Higher use of gas, a cleaner fuel, is likely to help India meet its climate change goals.

On 15 June, Reliance Industries Ltd and partner BP Plc. had said the companies will invest a combined Rs40,000 crore in their D6 gas field in the Krishna-Godavari basin, off India’s eastern coast, to boost production over the next 3-5 years.

“We already have investments across the gas value chain, from LNG import terminals to city gas distribution networks, the major among them being a five million tonne import terminal at Kamarajar port near Chennai, scheduled for commissioning in 2018-19,” Indian Oil chairman Sanjiv Singh said in a statement.

The refiner’s board of directors, which met on Thursday also decided to invest Rs15,034 crore to expand its Gujarat refinery to 18 million tonne a year from 13.7 million tonne at present. The idea is to meet the rising demand for petroleum products in the western part of the country.

Singh also said that the new configuration of the refinery will give it the flexibility to deal with likely disruptions in fuel supply and demand in the future.

The company will expand the combined capacity of its 11 group refineries from 80.7 million tonne a year at present to over 100 million tonnes a year in the next five years.

It is also pursuing a 60 million tonne a year integrated refinery-cum-petrochemicals project on the west coast, along with other refiners Bharat Petroleum Corp. Ltd and Hindustan Petroleum Corp. Ltd.

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