UPDATE 2-India offers Qatar stake in Petronet, seeks LNG http://today.reuters.com/news/articleinvesting.aspx?type=newIssuesNews&storyID=2006-10-05T135504Z_01_BOM306289_RTRIDST_0_ENERGY-INDIA-QATAR-UPDATE-2.XML
Thu Oct 5, 2006
(Adds details, background)
By Nidhi Verma
NEW DELHI, Oct 5 (Reuters) - India has offered Qatar a stake of up to 12.5 percent in gas firm Petronet LNG Ltd. (PLNG.BO: Quote, Profile, Research), officials said on Thursday, sending its shares up 20 percent as analysts said a deal would secure stable LNG supplies from the Gulf state. Petronet's managing director, Prasado Dasgupta, said Qatar could buy a stake in the company by subscribing to a $100 million foreign currency convertible bond issue, to be floated soon.
"We have approvals for the bond issue and Qatar can buy a 7.5 to 12.5 percent stake in the company through it," Dasgupta told reporters after meeting Qatar's finance minister, Yusuf Hussain Kamal, in New Delhi. "It (any Qatar deal) will help Petronet in gas sourcing on a long-term basis," said Raj Gandhi, research analyst at UTI Securities in Mumbai. Energy-hungry India, Asia's third-largest oil consumer and fourth-biggest economy, also said on Thursday it was seeking an extra 10 million tonnes a year of long-term LNG supplies from Qatar, beginning in 2010, to meet soaring demand.
India, which imports 70 percent of its crude oil requirements and is able to supply only half of its gas demand of 170 million cubic metres a day, has been aggressively hunting for long-term oil and gas supplies. Petronet LNG offered a 10 percent stake to Qatar in 2003 at the time of its initial public offering.
"At that time they did not exercise this option, but now they have come back," Dasgupta said.
Shares in Petronet, which operates a LNG regasification terminal on the west coast of India, closed at 57.90 rupees in a firm Mumbai market after trading was suspended as the stock rose 20 percent, hitting its daily limit.
EXPANSION PLANS
Dasgupta said Qatar would decide whether to take up the offer -- and suggest a price it would be willing to pay -- after a team from the Qatar Investment Agency visits India next week to carry out a due diligence study.
Indian Oil Minister Murli Deora said the country was also seeking an additional 10 million tonnes of LNG from Qatar annually, beginning in 2010. "Their response was very positive and the LNG will be used for Kochi, Ratnagiri and Mangalore LNG terminals," Deora said.
In July 1999, Petronet signed a 25-year contract to buy 7.5 million tonnes of LNG from Ras Laffan Liquefied Natural Gas Co. Ltd II (RasGas II), a joint venture between state-run Qatar Petroleum and Exxon Mobil (XOM.N: Quote, Profile, Research).
India now receives 5 million tonnes a year, and the full complement is due to start arriving from 2009.
OPEC-producer Qatar is home to the world's third-largest gas reserves, and is expected to ship some 77 million tonnes of LNG a year by 2011, making it the world's top exporter.
Petronet plans to double capacity at its 5-million-tonne Dahej LNG terminal in the western state of Gujarat by Dec. 2008.
It is setting up a new terminal at Kochi, in southern state of Kerala, which will be able to handle 5 million tonnes of LNG. The unit should be completed by June 2010.
Dasgupta said Petronet planned to sign an agreement with Australia's North West Shelf in December to import 2.5 million tonnes of LNG annually for the Kochi terminal.
The firm is also exploring the acquisition of an LNG unit at the troubled Dabhol power plant in Maharashtra state, originally built by Enron. "If Qatar buys a stake in our company, it will be offered a share in the (Dabhol) LNG terminal," Dasgupta said.
Four state-run energy firms -- Oil and Natural Gas Corp. (ONGC.BO: Quote, Profile, Research), GAIL (India) Ltd. (GAIL.BO: Quote, Profile, Research), Indian Oil Corp. Ltd. (IOC.BO: Quote, Profile, Research) and Bharat Petroleum Corp. Ltd. (BPCL.BO: Quote, Profile, Research) -- together hold 50 percent of Petronet.
Gaz de France (GDFPp.PA: Quote, Profile, Research) (GAZ.PA: Quote, Profile, Research) owns 10 percent, with the remaining 40 percent held by public and institutional investors.
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