Petronet looks to buy stake in Qatari LNG projects

New Delhi: Petronet LNG Ltd is eyeing a stake in the planned LNG expansion projects in Qatar as it looks to venture overseas to diversify its portfolio, its MD and CEO Prabhat Singh said.

Petronet, India's biggest LNG importer, wants to buy a stake that will give it a position on the board of the Qatari company, he said. It 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. But Oil and Natural Gas Corp (ONGC) which was assigned to pick up the equity hesitated in making the USD 135 million payment.

The stake is now worth USD 2 billion. 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.

"We sounded Qatar of our intention of acquiring a meaningful stake in any of the planned expansion projects," he said.

Petronet can take a stake in either of the planned projects of QatarGas or RasGas. Typically, each train or plant of LNG is a separate company and Petronet can pick a stake in that.

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 are converted into liquid at sub-zero temperature, shipped and marketed world over.

Petronet operates a 15 million tonnes 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.

"Having operated Dahej terminal at over 100 per cent capacity without an accident or break, we are today possibly the best company in the world to operate an LNG import and regasification facility. But we don't have any expertise in the liquefication business," he said.

Singh said Petronet wants to acquire a stake that will guarantee it a board position. "We don't know what that stake would be but we are keen to be on board of the company," he said.

Petronet has also proposed the same to the consortium operating the Mozambique's Offshore Area 1 that plans to convert 60 trillion cubic feet of gas reserves into LNG.

"We can pick up stake in the initial two LNG trains of capacity 6 million tonnes per annum each that they plan to develop," he said.

ONGC Videsh Ltd, the overseas arm of state-owned ONGC, holds 16 per cent stake in Mozambique offshore block Rovuma Area 1. Oil India Ltd has 4 per cent stake while a unit of Bharat Petroleum Corp Ltd (BPCL) holds 10 per cent stake.

"I don't know why the option of taking a stake in Qatari company was not exercised but we now want to do that," he said.

The offer made to Petronet in lieu of LNG purchases was the same that RasGas had promised Korea's KoGas in an LNG supply deal.

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 broke down on the premium asked, sources said.

Qatargas is the largest LNG producing company in the world, with an annual production capacity of 42 million tonnes per annum. RasGas has a production capacity of about 37 million tonnes a year.