Petronet to sign shareholder pact with Gas de France on June 1

Anupama Airy & Jyoti Mukul

New Delhi, April 16: PETRONET LNG Ltd (PLL) will sign the shareholders agreement with the French oil and gas major - Gas de France (GDF) on June 1. GDF has agreed to pick up 10 per cent equity in Petronet LNG through its investment arm- GDF International.

On being contacted, the managing director of Petronet LNG SC Mathur confirmed the two companies were the process of giving final touches to this agreement and had plans to sign the same by June 1.

According to Mr Mathur, Petronet LNG has also signed the joint payment security mechanism (PSM) with its LNG supplier RasGas of Qatar.

PSM is a crucial agreement which spells out the financing mechanism and the role each party will play in the LNG chain which includes liquefaction train of RasGas, ships, ship-building, PLL terminal and operation and maintenance contracts. The mechanism also give details of the funding plans for the project.

In addition to this, the board of Petronet LNG, in a recent meeting, has also finalised the equity structure of the company. It has now been agreed that the existing promoters of PLL including the Gas Authority of India Ltd (GAIL), Bharat Petroleum Corporation Ltd (BPCL), Indian Oil Corporation (IOC) and Oil and Natural Gas Corporation (ONGC), will increase their shareholding to 12.5 per cent each from the existing 10 per cent.
A joint venture agreement (JVA) between these oil companies will also be signed shortly. Following this, the oil companies will jointly hold a 50 per cent stake in PLL.

Earlier, the oil companies along with the public sector power major - National Thermal Power Corporation - were to pick up an equity stake of 10 per cent each.

However, following NTPC’s decision to defer its plans on picking up equity in the joint venture for the time being, the other promoters have decided to increase their stake to 12.5 per cent each.

Out of the remaining 50 per cent equity, it has been decided that Ras Gas of Qatar will pick up 10 per cent, GDF International will pick up another 10 per cent, 5 per cent will be taken by the government of Gujarat and the balance of 25 per cent will be picked up by a host of leading financial institutions and banks.

RasGas (Ras Laffan Liquified Natural Gas Company) is the supplier of LNG to PLL and has entered into a long term sales purchase agreement (SPA) for supply of 5 million metric tonnes per annum of LNG for the Dahej terminal and 2.5 mmtpa for Kochi terminal.

It has also been decided that GAIL will undertake transportation of regassified LNG for both Dahej and Kochi terminals. Marketing of regassified LNG will be done by GAIL, IOC and BPCL from Dahej and Kochi projects. PLL has already signed a heads of agreement with GAIL, IOC and BPCL for marketing of 5 mmtpa of LNG from Dahej project. The draft gas sales and purchase agreement is being deliberated and is expected to be finalised by the end of May.