Committee to decide stake offer to Shell in Kakinada gas project

The Andhra Pradesh government has appointed a committee of senior officials to explore the possibility of offering a 30 per cent stake to Europe's largest oil company -- Royal Dutch Shell -- in a gas project at Kakinada, a senior official said.
    
Any decision on the sale would be contingent on the company abandoning the proposal to set up similar venture on the east coast, he said.
    
The state government has already obtained legal opinion from Solicitor General of India Mohan Parasaran, who favoured the idea with some riders.
    

Infrastructure and Investment Secretary M T Krishna Babu said a high level committee headed by Chief Secretary P K Mohanty recently met and appointed a panel of senior officials to give a report with various options to the State Industrial Promotion Board (SIPB), which will take a final call.

    
In 2013, Shell had announced plans to build a floating LNG of up to 5 million tonnes per annum capacity off Kakinada coast in a joint venture with Anil Ambani Group firm Reliance Power, which exited the project last year.
    
Similarly, the AP government-owned APGIC and GAIL floated AP Gas Distribution Company (APGDC) to set up a 3.5 million tonnes capacity (expandable up to 10 million tonnes) Floating LNG Storage Regasification Unit (FSRU) in the East Coast at Kakinada Deepwater Port.
    
APGDC also tied up with the GDF Suez LNG UK Ltd by offering 26 per cent stake in the project. Perturbed with Shell's proposed venture, the state government wrote a letter to the Ministry of Environment and Forests that it has not cleared the project keeping in view the technical and commercial aspects.

    
Deputy High Commissioner of the UK, along with senior officials of Shell recently met Chief Minister N Kiran Kumar Reddy and expressed their intention to join the FSRU project being taken by the APGDC, which tied up with the GDF Suez LNG.
    
"We received Parasaran's comments on offering 30 per cent stake to Shell. The high-level committee headed by the Chief Secretary took up the issue and appointed a committee, which will submit various options to the SIPB. Parasaran's opinion is that we may offer 30 per cent stake in the project.
    
"He (Parasaran) also expressed his view that the state government interest should also be protected," Krishna Babu told PTI.

    
The state government was earlier willing to offer stake up to 24 per cent to others so as to keep 50 per cent with APGDC.
    
According to the new proposed formula that was worked out, the APGDC will have 41 per cent, Shell 30 per cent, GDF Suez 26 per cent and Kakinada Seaports 3 per cent stake in the yet-to-be-formed SPV, Krishna Babu said.