Petronet LNG Ltd has dropped plans to buy 25 per cent stake in GSPC's almost-complete Rs 4,500-crore Mundra LNG import terminal in Gujarat to allow its promoter IOC to pick a larger stake, a company official said.
State-owned Indian Oil Corporation (IOC) has been talking to Gujarat State Petroleum Corporation Ltd (GSPC) for almost two years now for acquiring 50 per cent stake in the 5-million tonne (mt) a year Mundra liquefied natural gas (LNG) import terminal.
Petronet, India's biggest gas importer, entered the fray earlier this year. It is keen on buying a stake in IOC's under-construction 5-mt 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 per cent 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 per cent stake in the Mundra project to IOC, but the company was willing to take not more than 25-26 per cent.
So, GSPC opened talks with Petronet for selling 25 per cent stake. But now, IOC is willing to look at a higher stake.
The Adani group holds 25 per cent 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 per cent stake in the Mundra LNG terminal and Adani 25 per cent. The remaining 25 per cent 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 and Europe's second-largest oil firm BP -- and state-owned Oil and Natural Gas Corporation (ONGC) were short-listed to pick 25 per cent 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, sources 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.