Government-owned refiner and oil marketing company Indian Oil Corporation (IOC) will rope in financial institutions IDFC and ICICI as strategic partners for its proposed Rs 5,151 crore liquified natural gas (LNG) terminal at Ennore in Tamil Nadu, two sources in the know told FE.
“The joint venture company has been set up. The issue to rope in IDFC and ICICI as strategic partners would be placed before the board shortly.
The exact stake of each partner would be finalised in the next few days,” said one of the sources.
B Ashok, chairman of IOC, said the PSU would hold 50% stake in the JV project, while other partners would have the rest. He however, did not divulge the name of the strategic partners IOC is negotiating with. Tamil Nadu Industrial Development Corporation (Tidco), a state government agency, would also have a marginal stake.
In 2014, IOC’s board gave its go-ahead for the 5 million tonne per annum (mtpa) terminal at Ennore in the Kamarajar Port. This is line with the company’s long-tern strategy eyeing bigger business in gas marketing in its endeavour to diversify and grow as an integrated energy company.
The government-owned company is in talks with as many as 12 players including Russia’s Gazprom to tie up long-term LNG supply and offer equity participation too. “We are talking to Gazprom to buy about 2.5 mtpa of LNG on long-term deal. There is also an option to offer equity participation. Both could be a combined deal, as it happens globally. But nothing is finalised till now,” said the second source.
With PM Narendra Modi expanding business ties with Russia and following President Vladimir Putin’s visit to New Delhi, Gazprom, the largest gas company, is aggressively looking for ‘big deals’ in the Asian nation. At present, GAIL (India) has entered into a deal to source 2.5 million tonne a year of LNG from Russia starting 2020.
Reading, UK-based Foster Wheeler has been chosen by IOC as the project consultant for the Ennore terminal. With statutory approvals in place, the terminal is expected to be operational by 2018. For evacuation of gas, the PSU firm is looking at connecting the terminal through pipelines to Tiruchi, Nagapattinam and Madurai in Tamil Nadu and further extending it to Chittoor in Andhra Pradesh and Bangalore in Karnataka.
In FY14, IOC bought about 3.41 million tonne of R-LNG. Of this, 45% was consumed internally, while 55% was marketed. “Our long-term strategy is that we should be marketing about 10 million tonne per annum by 2022. We have many things in plan; we have our eyes focused on 2-3 more LNG terminals,” Debasis Sen, director (planning and business development) of IOC, had said in a recent interview to FE.
In March 2014, IOC announced buying a 10% stake in Petroliam Nasional berhad (Petronas) Canadian gas project, which would offer the Indian firm 1.2 mtpa of LNG for exports for 20 years.