Petronet LNG Ltd is keen to partner with ONGC Videsh Ltd to buy a stake in Qatar Petroleum’s upcoming gas exploration and liquefied natural gas (LNG) projects, its MD and CEO Prabhat Singh said. Qatar Petroleum plans to expand LNG production capacity from 77 million tons per year to 100 million tons in next few years. Petronet is keen to take 5 per cent stake in the expansion project along with associated upstream gas development, he said.
State-owned Qatar Petroleum, which consolidated its two LNG producing companies — Qatargas and RasGas into itself earlier this year — is looking to form a joint venture with international partners to deliver the North Field expansion. “We had meetings with them and they have asked us to give a business proposal,” Singh said, adding the joint team of Petronet and OVL is keen to visit data room to firm their views. Petronet currently buys 7.5 million tons of LNG per annum from RasGas of Qatar under a 25-year contract. RasGas had in the contract promised to give 5 per cent stake to Petronet or its nominee in the liquefication plant in the Gulf nation.
But Oil and Natural Gas Corp (ONGC), which was assigned to pick up the equity, hesitated in making the $135-million payment. The stake is now worth $2 billion. Singh said Qatar has announced plans to produce 100 million tons of liquefied natural gas (LNG) annually — equivalent to a third of current global supplies — in the next five to seven years, up from current 77 million tons. Petronet is keen to get ownership of gas molecule at the well-head and so wants a stake in both the upstream development and LNG production facility, he said.
The stake would help Petronet, which is India’s biggest LNG importer, better understand the business of converting natural gas extracted from under-sea fields are converted into a liquid at sub-zero temperature, shipped and marketed world over. This will be its first investment in an LNG production plant. Petronet operates a 15 million tons per annum terminal at Dahej in Gujarat for import of LNG and converting the liquid fuel back to its gaseous state before piping it to customers.
Singh said Petronet wants to acquire a stake that will guarantee it a board position. The offer made to Petronet in lieu of LNG purchases was the same that RasGas had promised Korea’s KoGas in an LNG supply deal. Article 30.7 of the agreement with Petronet promised the stake at “no premium” but RasGas reneged on its commitment and demanded a premium from ONGC, which was nominated to take the stake. The talks broke down on the premium asked, sources said.