Indian companies eye stake in Russia’s Yamal LNG project

by on July 31, 2012 12:00 am BST

Indian companies eye stake in Russia’s Yamal LNG project


NEW DELHI–A consortium of Indian companies comprising Oil & Natural Gas Corp., Indian Oil Corp. and Petronet LNG Ltd is looking at buying about a 15% stake in Russian natural-gas producer OAO Novatek’s  Yamal LNG Project, Petronet’s managing director said Tuesday.

While offloading a stake in Yamal to India may help Novatek seal a deal for supply of LNG, it will help the energy hungry South Asian nation secure its fuel sources.

Fuel shortages, aggravated by a decline in local gas output and less-than-estimated coal production, have crippled India’s power stations. On Tuesday, the grid collapsed in India for a second time in last two days, which left hundreds of millions of people without power for several hours, disrupting transport and businesses.

“The talks are on,” Petronet’s Ashok Kumar Balyan told reporters. “Maybe in the next two months we’ll be able to decide.”

Novatek didn’t immediately comment.

Yamal LNG holds a license to develop the South-Tambeyskoye field, located at the northeastern portion of the Yamal peninsula in Russia’s western Arctic region. It is also building an onshore LNG facility near Sabetta on the Yamal peninsula. While Novatek holds 80%, French oil and gas major Total SA has the remaining 20% in the project.

The Yamal LNG project could see an investment of $23 billion to $24 billion, Mr. Balyan said.

India’s LNG capacity is expected to reach 50 million metric tons by 2017 from about 13.5 million tons per annum now, as the local gas shortages are leading to higher demand for imported gas.

Petronet, India’s largest LNG importer by volume, is in talks to secure long-term LNG supplies as it seeks to expand its capacity to 25 million tons in the next three years from 10 million tons now, Finance Director R.K. Garg said at a news conference Tuesday. The conference was held to declare the company’s quarterly earnings.

ONGC’s subsidiary Mangalore Refinery & Petrochemicals Ltd. has been looking to set up an LNG terminal. Indian Oil is building a 5-million-ton capacity LNG terminal at Ennore in the southern state of Tamil Nadu.

Separately, Mr. Garg said Petronet’s fiscal-first-quarter net profit rose 5% to 2.71 billion rupees, helped by higher margins on gas sales, while sales jumped 53% to INR69.93 billion due to higher gas rates and as the rupee declined against the dollar.

Mr. Garg said Petronet’s billing is in dollars, which boosted sales for the April-June quarter.

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