Dec 26, 2012, 10.54 AM IST
Qatar Petroleum has expressed interest in buying a 5.2 per cent stake in Petronet LNG Ltd, a potentially conflict of interest proposition as it will give the gas supplier a vantage position in India's largest fuel importer.
Qatar Petroleum, the Persian Gulf country's state-run energy firm, has majority stakes in RasGas and QatarGas that along with other liquefied natural gas (LNG) suppliers in the world compete to sell fuel to India.
If Qatar Petroleum (QP) picks up 5.2 per cent stake as well as board position in Petronet, it will give the company an undue advantage over other suppliers as it will be privy to price and other negotiations, sources in Petronet's promoter firms said.
This will possibly be the first instance of a LNG supplier picking up stake in an importing firm.
Sources said Asian Development Bank (ADB) wants to sell its 5.2 per cent stake in Petronet since last year.
Petronet, which is registered as a private company even though public sector oil firms hold 50 per cent stake and Oil Secretary is its Chairman, has approached QP's 100 per cent subsidiary Qatar Petroleum International offering ADB's stake.
The PSUs -- Indian Oil, Oil & Natural Gas Corp, Bharat Petroleum and GAIL India -- had previously evinced interest in buying the ADB stake but the Oil Ministry blocked the move as it would have turned Petronet into a public sector company.
It was then offered to Qatar Petroleum International.
But the stake being picked up by QP will lead to a potential conflict situation, sources said.
RasGas, in which QP holds 70 per cent stake, supplies 7.5 million tonnes of LNG on a long-term contract to Petronet. It remains a potential supplier for the new terminals that Petronet is building at Kochi and east coast and a board position may give it an undue advantage, they said.
In fact, RasGas had in the contract to supply 7.5 million tonnes LNG promised to give 5 per cent stake to Petronet or its nominee in the liquefication plant in Qatar.
This clause was the same that RasGas had promised Korea's KoGas in a LNG supply deal.
Article 30.7 of the agreement with Petronet promised the stake at "no premium" but RasGas reneged on its commitment and demanded a premium from ONGC , which was nominated to take the stake. The talks broke down on the premium asked, sources said.
Sources said Qatar Petroleum getting stake is like vendor picking up a board position in a company that gives out contracts.
One seller on board will be disadvantage to other sellers, they added. .
ONGC stock price
On December 11, 2013, Oil and Natural Gas Corporation closed at Rs 291.75, down Rs 6.2, or 2.08 percent. The 52-week high of the share was Rs 354.10 and the 52-week low was Rs 234.40.
The company's trailing 12-month (TTM) EPS was at Rs 22.24 per share as per the quarter ended September 2013. The stock's price-to-earnings (P/E) ratio was 13.12. The latest book value of the company is Rs 145.47 per share. At current value, the price-to-book value of the company is 2.01.
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