Shell may sell part LNG stake

Shell India is ready to part-sell its stake in the Shell Hazira LNG terminal provided the new partner brings in value for the venture. The company has majority stake of 74 per cent in the venture.

Marc Den Hartog, director, Shell India (gas and power), said, "We are open for an equity offer which will add value to our LNG venture."

However, he added, "We have long-term commitments towards the LNG receiving and regasification project and do not intend to desert it selling off our stake completely."

He said, "We part-sold our equity stake to Total as the company, along with funds, brought its experience and exposure in the LNG business."

The French energy major picked up 26 per cent equity in the Hazira terminal in March 2004. And since then the market has been ripe with rumours that Shell would exit the project selling off its entire stake to interested buyers "� local or overseas.

Hartog preferred not to make comments on any talks that might be going on with an energy company in the private or the public sector.

"If we are in talks with anybody at all, it will be under a confidentiality agreement and so, neither side will make any comment on it," he said referring to recent media reports on the GAIL-Shell talks for a stake in the Hazira terminal.

The situation in the domestic LNG business has changed completely since the time of Total's Hazira terminal stake buy. Early this year, Shell bought some LNG cargoes on a spot basis and offered them to domestic consumers.

With a steep rise in global oil prices and, hence, in natural gas prices, gas consumers as well as suppliers in the domestic market have finally accepted the market-driven price scenario and agreed to lift LNG at prices above $8-9 per mmbtu.

With successful sale of four spot cargoes Shell is now confident of selling more spot cargoes in the local market, Hartog said. Shell is also in the process of connecting the Hazira terminal with GAIL's pipeline network between Dahej and Uran.

Increasing interest of local buyers in cornering spot LNG cargoes has increased the company's interest in the Indian LNG market.

In such a favourable scenario, Shell is expected to get a good price for the portion it proposes to sell from its stake in the Hazira terminal.