RIL-BP leads the race to pick up 25% stake in Mundra terminal

BP and Reliance Industries Ltd (RIL) are leading the race to pick up a 25 per cent stake in Gujarat State Petronet Corporation (GSPC) and the Adani group's five million tonnes per annum (mtpa) liquefied natural gas (LNG) terminal at Mundra, Gujarat.

India Gas Solutions (IGS), the equal joint venture formed by the two companies, is one among the eight bidders who bid for a 25 per cent stake in the Mundra terminal early this year. GSPC and Adani have zeroed in on three players - IGS, Oil and Natural Gas Corporation (ONGC) and IndianOil Corporation (IOC). "Given RIL is one of the biggest LNG importers and BP is an international partner with good experience, it would be good to have them on board," said a senior GSPC executive close to the development.

If IGS bags the stake, it would be the company's first venture in India after its formation in 2011. IGS was formed as a 50:50 joint venture between BP and RIL after BP bought a 30 per cent stake for $7.2 billion in 21 oil and gas production sharing contracts in India, including the KG-D6 block.

"RIL is India's biggest LNG importer and it has BP as a partner. With GSPC looking at long-term gas supplies, IGS stands to gain," said a Mumbai-based analyst tracking RIL.

According to the GSPC executive quoted above, as of now the due diligence is over and the players would be asked to submit commercial proposals based on capacity booking by January 15, 2014.

Another official tracking the development said the short-listed candidates would be given two months' time to submit their final bids. "Being government organisations, ONGC and IOC would need various rounds of approval. We would give two months to the players to submit a final bid. While the bids would be opened in March, a final closure would happen by June," the official added.

Those winning the bid would be required to pump in Rs 400 crore over a period of three years for the project. This August, eight players filed an Expression of Interest (EoI) for the 25 per cent stake. Other than the shortlisted players, the bidders included GAIL India, Petronet-LNG, Torrent Energy, Japan's Mitsui & Co and Toyota Tsusho Corporation.

A company executive said Petronet LNG, despite its experience, was not short-listed as there could have been a conflict of interest. IOC and ONGC, on the other hand, hold 12.5 per cent stake in Petronet-LNG. IOC is also setting up a five mtpa LNG terminal at Ennore, Tamil Nadu.

Share of the Pie

• India Gas Solutions,formed in 2011, is a 50:50 joint venture between RIL and BP
• If IGS bags 25% in Mundra terminal, it would be its first venture in India
• IOC and ONGC hold 12.5 per cent stake in Petronet-LNG
• IOC is also setting up a 5-mtpa LNG terminal at Ennore, Tamil Nadu
• GAIL India, Petronet-LNG, Torrent Energy, Japan's Mitsui & Co & Toyota Tsusho Corporation also bid

Image: Chairman and Managing Director of Reliance Industries Mukesh Ambani (L) and CEO of BP Robert Dudley.