Oil, gas majors show interest in Dabhol’s LNG facility

Anupama Airy

New Delhi, Aug 10: Despite a lukewarm response for Enron’s 65 per cent stake in Dabhol power project at $1 billion, a host of leading oil and gas majors have evinced interest in taking over the LNG facilities developed by Enron at Dabhol.

Senior government officials told The Financial Express that companies including Shell, Petronet LNG, Tata Totalfina have given feelers to the financial institutions (FIs) in this regard.

However, sources clarified that no formal talks have begun with these companies as a final decision over separation of LNG facilities developed by Enron, is yet to be taken.

Following Enron’s decision to pull out of Dabhol power project, the Centre has already directed the FIs, led by IDBI and ICICI, to work out a revival package for saving this controversy ridden power project.

The package being worked out by FIs is aimed at bringing down the cost of power from Dabhol by appropriate restructuring of the project.

This, sources said, would include separation of the LNG terminal and other infrastructure facilities from the main power project besides re-negotiation of LNG procurement and shipment contracts.

Sources revealed that the ministry of power in consultation with the ministry of petroleum and natural gas is already examining the possible integration of Dabhol LNG facility with the expansion plans of Petronet LNG, which is a joint venture company of public sector oil and gas majors — IOC, BPCL, GAIL and ONGC.

Sources disclosed that as part of restructuring of Dabhol power project, the ministry of petroleum has also been asked to examine the feasibility of integrating the Dabhol facility with the broader plans of LNG imports into India and also examine the necessary pipeline investments in this regard.

“Even other private companies who are interested in LNG imports can consider taking over these facilities. All the options are being explored to restructure the tariff from Dabhol so that buyers can be found following Enron’s exit,” officials said.

According to FI sources, till the phase-II of the Dabhol power project is completed, it will be difficult to find many takers for the Enron’s power project. Investors would be interested only when the entire project is completed and restructuring of tariff is carried out.

Commenting on the figure of $1 billion quoted by Enron towards its equity stake, FIs sources said, this is an “exaggerated” figure and Enron is being unreasonable for quoting the price so high.