The Hindu Business Line : Hazira project: Shell not interested in diluting stake

New Delhi May 14 Public sector units Hindustan Petroleum Corporation and GAIL (India) may have to wait — Shell Gas BV has said that it has no immediate plans to dilute its stake in the Hazira liquefied natural gas terminal project. This puts at rest all speculations on whether Shell would be diluting its stake in the project or not since a number of industry players, including HPCL and GAIL (India) Ltd had expressed equity interest in the project.

A senior company official told Business Line, "The LNG terminal business - Hazira LNG Private Ltd - is, and remains, a viable investment for Shell and while we welcome equity participation based on value addition, we are not interested in diluting our stake just like that. We are happy with our other partner." In the Hazira project, Total Gaz Electricité Holdings of France has 26 per cent stake.

Shell, which began operating the country's second LNG terminal in April 2005, imports two cargoes per month. The company sells the product at a market price. The market price is roughly double the cost at which Petronet LNG Ltd, India's largest LNG importer, is selling re-gasified LNG from its Dahej terminal in Gujarat. The spot market price of LNG was in the range of $8-11 per million British thermal unit.

The Dutch company's LNG terminal together with infrastructure is laid out for a capacity of 5 million tonnes per annum (mtpa). Though the initial throughput capacity is of the order of 2.5 mtpa, marginal incremental investments in equipment will enhance the capacity to 5 mtpa. In keeping with market expansion, the terminal is expected to achieve a throughput capacity of 10 mtpa. Involving an investment of Rs 3,000 crore, the Hazira LNG terminal project is one of the largest greenfield foreign direct investments in the energy sector in India. Shell remains the majority owner and operator.

Hazira project includes two other companies apart from the LNG project Shell Hazira Gas Private Ltd and Hazira Port Private Ltd. In all the projects, Total has 26 per cent stake.