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Petronet LNG to buy stakes in gas fields abroad

29 Apr 2009

Petronet LNG, which is the country’s biggest natural gas importer, plans to go upstream through acquisition of stakes in on shore gas field in Papua New Guinea and offshore gas field in Australia, in partnership with ONGC. It also plans to set up gas liquefaction plants in the two regions, involving a total investment of up to $20 billion.

 

The company is looking at these so-called farm-in arrangements for gas fields with total reserves of 7-12 trillion cubic feet (tcf) gas. These reserves would be able to support a 5-7 million tonne liquefaction plant for a 25-year period. Setting up of a plant of this capacity typically involves an investment of $8-10 billion and could take at least 5-6 years.

 

The due diligence at both these locations is over. The talks on financial valuation are expected to begin shortly. The purpose behind this initiative is to secure an independent source of energy supply for India and curb the volatility in delivered gas prices. The process is likely to be over by this calendar year.

 

The purchase of stake in gas fields and setting up of liquefaction plants would require a total investment of as much as $32-40 billion, which will be funded through a mix of debt (70 per cent) and equity (30 per cent).

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