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Oman Willing to take Minority Stake in Petronet LNG
Apr 04, 2014

Oman is in talks with India to buy a minority stake in Petronet LNG Ltd.’s planned Liquefied Natural Gas terminal off India's east coast. The oil and gas minister of Oman, Mohammed Bin Hamad Al Rumhy said that Oman wants to buy a 10% to 20% stake in the 5 million tons a year LNG terminal at Gangavaram, in Andhra Pradesh. The stake could be bought through an investment or pension fund. Petronet's track record in the terminal business is attractive and there are synergies as well.

Indian state-run companies Oil & Natural Gas Corporation (ONGC), Indian Oil Corporation (IOC), Bharat Petroleum Corporation and Gas Authority of India Limited (GAIL) hold a 12.5% stake each in Petronet. French power company GDF Suez owns 10% and the Asian Development Bank another 5.2%. The rest is held by public, insurance companies and mutual funds.

The Omani minister didn't elaborate what the synergies were. However, it is anticipated that  these could be in the form of long-term LNG supply contracts that Oman could sign with Petronet if the deal goes through.

Petronet could also benefit as it would get steady supplies to meet rising gas demand from Indian refineries, petrochemical and power projects. These industries are currently running their plants below capacity due to a shortfall in local natural gas output. LNG importers are already ramping up their processing capacity to meet the rising demand.

Petronet, for instance, plans to more than double its capacity to 25 million tons a year in the next few years from 10 million tons currently. It is working on building two new terminals, including the one in Gangavaram, which is expected to be completed by 2016.

The deal would also boost bilateral trade between India & Oman, which more than doubled to about $4.6 billion in five years ended March 31, 2013. Oman is already a partner in a Central India refinery of Bharat Petroleum Corp. The two countries have also been discussing an under-sea natural gas pipeline for more than a decade.


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