Petronet Keen to Partner OVL for Stake in Qatar LNG Project

Petronet LNG Ltd. is keen to partner with ONGC Videsh Ltd. (OVL) to buy a stake in Qatar Petroleum’s upcoming gas exploration and liquefied natural gas (LNG) projects, its MD and CEO Mr. Prabhat Singh said.

Qatar Petroleum plans to expand LNG production capacity from 77 million tonnes per year to 100 million tonnes in next few years. Petronet is keen to take 5 per cent stake in the expansion project along with associated upstream gas development, he said.

State-owned Qatar Petroleum, which consolidated its two LNG producing companies – Qatargas and RasGas, into itself earlier this year, is looking to form a joint venture with international partners to deliver the North Field expansion.

“We had meetings with them and they have asked us to give a business proposal,” Mr. Singh said, adding the joint team of Petronet and OVL is keen to visit data room to firm their views.

Petronet currently buys 7.5 million tonnes of LNG per annum from RasGas of Qatar under a 25-year contract. RasGas had in the contract promised to give 5 per cent stake to Petronet or its nominee in the liquefication plant in the Gulf nation. Article 30.7 of the agreement with Petronet promised the stake at “no premium” but RasGas reneged on its commitment and demanded a premium from ONGC, which was nominated to take the stake. The talks reportedly broke down on the premium asked.

Mr. Singh said Qatar has announced plans to produce 100 million tonnes of liquefied natural gas (LNG) annually – equivalent to a third of current global supplies – in the next five to seven years, up from current 77 million tonnes. Petronet is keen to get ownership of gas molecule at the well-head and so wants a stake in both the upstream development and LNG production facility, he said. The stake would help Petronet, which is India’s biggest LNG importer, better understand the business of converting natural gas extracted from under-sea fields into a liquid at sub-zero temperature, and then shipping and marketing it the world over. This will be its first investment in an LNG production plant.

Petronet operates a 15-million-tonne-per-annum terminal at Dahej in Gujarat for import of LNG and converting the liquid fuel back to its gaseous state before piping it to customers. Mr. Singh said Petronet wants to acquire a stake that will guarantee it a board position.