IndianOil eyes stake in GSPC?s proposed LNG terminal

Gujarat State Petroleum Corporation (GSPC) is in talks with the public sector undertaking Indian Oil Corporation Ltd (IndianOil L) for equity participation in the company?s proposed liquified natural gas (LNG) terminal in Pipavav in Saurashtra or Mundra in Kutch. IndianOil  is in talks with Iran?s state-owned gas company for sourcing LNG on a long-term basis for this project. The volume of the LNG supply is going to be in the range of 4 to 5 million tonnes a year.

"The talks regarding IndianOil ?s participation in the proposed LNG terminal and their level of participation is at initial stages. However, IndianOil  and GSPC are working at a good pace on a possibility of a long-term sourcing agreement of LNG from the IndianOil ?s proposed liquefaction plant planned in Iran and gas supply contract (GSC) can be signed anytime early next year," sources in IndianOil L told ET. IndianOil , India?s biggest refiner, has been actively seeking participation in the LNG business.

The LNG terminal is likely to be commissioned within three years from the date of final agreement between the JV partners. The setting up of the liquefaction plant could be expedited to coincide with the proposed LNG terminal in Pipavav.

IndianOil  had first announced its intention to set up a liquefaction plant in the second half of 2004. The gas field located in the gigantic South Pars gas field in Iran will be liquified and then supplied to markets such as India. The demand for gas in India itself is likely to be more than double in next five years to over 200 million standard cubic meters a day (MMSCMD).

While officials at GSPC refused to comment on the talks with the IndianOil , official spokesperson at IndianOil  could not be contacted.

The proposed LNG terminal announced by GSPC will be executed by a joint venture company and is likely to be set up in Pipavav. The total cost envisaged for the 5 million tonne capacity LNG terminal is close to Rs 5,000 crore and is expected to be commissioned by fiscal 2010.

"We are already one of the leading players in LNG trade in India and have established ourselves in the LNG business. We will leverage this for tying up for long term LNG supplies for the proposed LNG terminal," sources in GSPC told ET.

Source: The Economic Times, Ahmedabad
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