Andhra Pradesh government has approved a proposal for offering 26% stake to Europe's largest oil company, Royal Dutch Shell, in a gas project at Kakinada.
The Andhra Pradesh government-owned AP Gas Infrastructure Corporation (APGIC) and state-owned GAIL floated AP Gas Distribution Company (APGDC) have 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.
According to a recent government order, the committee which was set up to look on the issue of allocating stake in the gas project to Shell, has recommended the proposal. APGDC had earlier tied up with the GDF Suez LNG UK Ltd by offering 26% stake in the project.
“The committee also noted that M/s Shell was an international market leader in the Natural Gas and LNG field with vast financial, technical and managerial expertise..", it said. The order also said the JV would benefit from the participation of Shell and that Shell would add overall financial market value to the proposed FSRU Project.
The committee has recommended that Shell may be provided 26% equity in the SPV at par with GDF Suez, it said. The Andhra Pradesh government has sought the opinion of solicitor general of India with regard to the stake offer.
The equity structure of the APGDC will be restructured with APGIC holding 52% equity and GAIL Gas having 48% equity.
"APGDC shall control the composition of the Board of the SPV for which necessary safe guards are to be provided in the shareholders agreement (SHA) to be signed for SPV," the government order further said.