IOC, GAIL pact to buy stake in Adani's LNG project expires

New Delhi: State-owned refiner Indian Oil Corp (IOC) and gas utility GAIL India Ltd's initial agreement to buy a 50 per cent stake in Adani Group's Rs 5,000-crore Dhamra LNG project in Odisha has expired, Oil Minister Dharmendra Pradhan said on Monday.

IOC and GAIL had on September 21, 2016, signed a "non-binding MoU" with Adani Petroleum Terminal Pvt Ltd to take 39 per cent and 11 per cent stake respectively in the planned 5 million tonnes a year liquefied natural gas (LNG) import terminal at Dhamra, he said in a written reply to the Lok Sabha here.

The MoU was "subject to management approvals of IOC and GAIL and successful negotiation of the respective regasification agreements," he said. "The MoU has expired on September 20, 2018."

"Further GAIL and IOC have informed that no capital expenditure has been made by them on this project," he said without saying if the two firms have altogether scrapped the plan to buy a stake in the Dhamra LNG project or they continue to be in dialogue with the Adani Group. He also did not give reasons for the expiry of the MoU.

Adani Petroleum Terminal Pvt Ltd was to hold the remaining 50 per cent stake. IOC had in 2015 signed up to use 60 per cent of the terminal capacity for importing gas for its refineries at Haldia in West Bengal and Paradip in Odisha.

GAIL too had signed up for 1.5 million tonnes of the terminal's regasification capacity.

The MoU for taking an equity stake in the Adani terminal followed GAIL dropping plans in March 2015 to set up a floating LNG import terminal at Paradip. IOC too had in 2012 signed an MoU with Dhamra LNG Port Corp Ltd (DPCL) to develop an LNG terminal at the port.

After shelving their respective plans, the firms signed a pact with Dhamra LNG Terminal Pvt, a firm owned by Adani Enterprises.