IOC, ONGC, BPCL and GAIL jointly hold 50 per cent in Petronet and over the last few months, pressure has been mounting from the ministry of power to allot NTPC a stake also. The petroleum ministry, in an informal communique, indicated that IOC and BPCL step down so that NTPC could get a berth in Petronet. Consequently, ONGC, GAIL and NTPC would each hold 16.66 per cent in the company.

The idea did not go down too well with IOC which apparently maintained that there was no way it would take this ouster lying down. Now, with the recent move by NTPC to source LNG for its Gujarat power plants from the British Gas pipeline, the oil PSUs are apparently of the view that "enough is enough as NTPC cannot have its cake and eat it too."

Sources say that the companies will soon meet the topbrass of the petroleum ministry and thrash out the issue. Their bone of contention is that when Petronet LNG has plans for a terminal in Dahej, there is no reason for NTPC to rely on British Gas supplying the feedstock from Pipavav. If there is no change in this arrangement, the oil PSUs will insist that NTPC be denied a stake in Petronet. In that case, the company would also not be offered equity in Petronet's subsidiaries at Kochi or Dahej where the LNG terminals costing $1,200 million are proposed to be built in 2002.

Incidentally, NTPC has apparently indicated its intention to pick up a 26 per cent stake in the five million tonne Pipapav LNG terminal being set up by British Gas and Gujarat Pipavav Port. The gas will be supplied to its power plants at Kawas and Gandhar.

NTPC had been insisting on a 26 per cent stake in Petronet LNG, a request that could not be acceded to as other PSUs needed to be accommodated also. The petroleum ministry finally came to the conclusion that it made more sense for ONGCand GAIL rather than BPCL and IOC to participate in the equity of the company. While no official communication was made to the two oil companies on their exclusion, IOC was reportedly unhappy with the state of developments and protested against the move.

The PSU was of the view that even with NTPC's inclusion, there was no reason why it had to be the `scapegoat'. IOC had also reiterated that LNG was going to be an important focus area in the future and that expertise in this field could always be sourced from ONGC, with whom it has entered into a strategic alliance for several petro-related activities.

There has been no indication of BPCL's reaction to the proposed ouster from the company though the grapevine has it that the PSU has decided to adopt a `wait-and-watch attitude'. Interestingly, there was a proposal to offer both IOC and BPCL equity participation in Petronet's subsidiaries -- Petronet Dahej and Petronet Cochin -- in the event of their being dropped from the holding company. Furtherdevelopments on this front are not known.

Petronet LNG was formed last year to cater to creation of infrastructure for imported LNG in the country. This was largely a result of the recommendations of the R-group, a committee set up by the ministry of petroleum and natural gas in 1995.

To quote the report: "The technology of production of LNG, its transportation and setting up of LNG terminals is a proven one, whereas technology for laying deep-sea pipelines is still to be fully established. In addition, landing of west Asian in the western region and its transportation to the southern region may make imported gas more expensive than LNG at coastal locations in southern India."

Therefore, says the report, "import of LNG for meeting the demands of natural gas in western India may turn out to be a more practical option in the long run. There exists a distinct possibility of importing LNG at very competitive prices in the southern coast of India."