HPCL may buy stake in Shell's LNG project

Hindustan Petroleum Corporation (HPCL) is planning to enter the domestic liquefied natural gas (LNG) market and is in talks with the Royal Dutch/Shell group of companies to pick up an equity stake in the latter's $600 million LNG import terminal at Hazira in Gujarat.

Last week, Shell roped in Total Gaz Electricite Holdings of France to pick up a 26 per cent in its LNG venture, which includes a port and a LNG terminal together with all related infrastructure with an initial capacity of five million tonnes of LNG per annum, to be scaled up to 10 million tonnes per annum.

HPCL and Shell executives declined to comment on the matter. Sources close to both the companies elaborated that HPCL is exploring the possibility of purchasing LNG from Shell. However, it was not clear whether HPCL will market the gas for Shell.

HPCL had earlier lost a chance to foray into the LNG business when it did not pick up equity in Petronet LNG, the project promoted by its contemporaries Indian Oil Corporation, Bharat Petroleum Corporation, Gas Authority of India and Oil and Natural Gas Corporation (ONGC). Petronet LNG has set up a 5 million tonne LNG import terminal at Dahej in Gujarat and is planning to double its capacity.

Shell's Hazira project is in advanced stages of completion, with over 70 per cent of the port and terminal work having been completed. It is expected to be commissioned in the second half of this year.

Meanwhile, HPCL informed the Bombay Stock Exchange on Monday that it "has signed a non-binding memorandum of understanding with Shell India today covering, the development of product supply and infrastructure sharing agreements to serve the mutual interests of both HPCL and Shell."