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British Gas buys out partner in Indian LNG project

British Gas, owned by BG Group, has bought out its domestic partner in a 5.3-million-tonne liquefied natural gas project in India's west coast for an undisclosed amount, a British Gas India Private Ltd spokesman said on Tuesday.

British Gas bought the 48 per cent held by Sea King Infrastructure Ltd in Gujarat Pipavav LNG Company, which is developing the LNG terminal at Pipavav in western Gujarat, Stuart Edwards said.

He said the project began with an agreement that BG would hold a majority stake of 52 per cent and Sea King the remaining 48 per cent.

"Efforts were also made to take on board National Thermal Power Corporation as an equity partner. But now a new shareholders agreement would be prepared which would make BG the sole promoter (of the LNG project)," he said.

He did not say how much the British gas company had agreed to pay Sea King for its stake in the project.

A leading financial daily on Tuesday reported BG had paid Rs 3.75 billion to the Bombay-based Sea King to gain control of the LNG project.

Sea King Infrastructure is the promoter of Gujarat Pipavav Port Ltd that operates the country's first private port at Pipavav.

Edwards said British Gas will invest about $550 million in the project, which will have an initial capacity to import and store 2.65 million tonnes of LNG.

"Though the promoters had initially agreed to build a capacity of 5.3 million tonnes, we will operationalise the terminal at a capacity of 2.65 million tonnes," he said.

Higher capacity

The first phase of the project, which has a regasification plant, was expected to be completed by 2005.

"We expect the financial closure for the project by 2002 and it would take another two to two-and-a-half years to complete the project," Edwards said.

The capacity of the LNG Terminal, located near the Pipavav port, would be raised to 10 million tonnes over a period of time, he said.

The company also plans to build a 150-km (94-mile) sub-sea pipeline from the terminal to the Hazira industrial estate. The pipeline will run through the Gulf of Khambhat.

Hazira is one of the largest industrial estates in Gujarat where Reliance Petroleum Ltd, Essar Steel and other companies have set up their facilities.

Edwards said BG would soon start negotiations with possible buyers including NTPC, which is constructing a 2,000-megawatt gas-based power plant at Pipavav.

"BG would be pushing new marketing initiatives soon," he said adding the company had also received response from eight companies for supply of LNG in response to a global tender.

"We hope to begin discussions with these companies in the next few months," he said.

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