The Hindu Business Line : GAIL, China Gas ink deal for natural gas projects

Projects identified
The two companies have initially identified compressed natural gas and coal bed methane projects.
After due diligence study, the joint venture shall be formed for implementing the projects.

New Delhi June 26 GAIL (India) Ltd and China Gas Holdings Ltd (China Gas) have inked a joint venture agreement for pursuing gas sector business opportunities in India, China and third countries. Pursuant to signing of this agreement, a joint venture company between the two entities will be formed, a statement issued by GAIL said.

Both GAIL and China Gas will hold equal (50:50) equity participation in the joint venture which will primarily work on natural gas sector projects in the areas of compressed natural gas and city gas, coal bed methane (CBM), pipelines, and liquefied natural gas (LNG).

The joint venture board would comprise four directors, two from each company. GAIL shall first nominate the chairman of the board and the chairmanship will rotate between GAIL and China Gas every two years, the statement said. Both GAIL and China Gas shall have equal representation in the management. The management positions held by the representatives of GAIL and China Gas shall also be rotated every two years.

The two companies have initially identified CNG and CBM projects and after due diligence study, the joint venture shall be formed for implementing the projects, GAIL said. Subsequently, more projects shall be identified and implemented by the joint venture. Project specific joint ventures will be formed along with local Government/companies, wherever it is required, the statement said.

Speaking on the occasion, Dr U.D. Choubey, Chairman and Managing Director, GAIL, said "following the joint venture, action would be speeded up on the city gas front and also the joint venture could look into possible joint working in the area of modular LNG systems which China Gas had been pursuing."

The association with China Gas is not new for GAIL. In May 2005, GAIL had made a strategic investment in China Gas by acquiring 210 million shares and it currently holds around 7 per cent equity interest in China Gas. GAIL also received dividend from China Gas for the year 2005-06. China Gas is performing well and its share price has also increased by more than 2.5 times in the last two years.

Mr Liu Ming Hui, Managing Director, China Gas, made a presentation on the performance of China Gas. He also said that GAIL was one of the first overseas strategic investors in the company and China Gas was looking forward to greater opportunities for joint working with GAIL in India and other countries.

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