Gazprom offers GAIL stake in gas cracker unit

Russian energy major Gazprom has offered GAIL India equity in a gas-based petrochemical plant in eastern Russia.

The proposal for the gas cracker unit is distinct from the strategic cooperation agreement signed between the two companies last week.

GAIL has been offered management and marketing rights for the plant which will utilise gas available from the Sakhalin project. Indian upstream company Oil and Natural Gas Corporation's overseas arm ONGC Videsh Ltd (OVL) has a 20 per cent equity in the first phase of Sakhalin.

Speaking to Business Standard, GAIL Chairman and Managing Director Proshanto Banerjee said a preliminary offer had been made to his company so far. Among the sites being considered for the plant is the port city of Nakhodka in eastern Russia.

Gazprom may also take on board a third equity partner in the gas cracker unit, said Banerjee. He said details were yet to be worked out between the partners.

OVL acquired 20 per cent participating interest in Sakhalin I offshore project from two subsidiaries of Russian state-owned oil company Rosneft "" SMNG-S and Rosneft-S in July 2001.

The partners of OVL in Sakhalin I project are Exxon Mobil (30 per cent equity), Rosneft and SMNG-S (20 per cent each), and Sodeco, a consortium of Japanese companies (30 per cent). Exxon Mobil is the operator of the project. The development of the first and second phases of Sakhalin would involve an investment of $25 billion over a decade.

Officials said other phases of Sakhalin were also being prepared for being put on block. It is estimated development of these phases would require an investment of $300-400 billion.

The Gazprom-GAIL partnership for Nakhodka gas cracker would be under the clause on "utilisation and processing of gas" in the strategic cooperation agreement signed last Friday, said an official.

Gazprom and GAIL are already working on the block N 26 in the Bay of Bengal within the framework of a production sharing agreement signed in October, 2000.

They are also likely to tie up for the fifth round of blocks to be put up for bidding by the Centre under the new exploration and lincensing policy.