Qatar Petroleum Eyes Stake In Petronet LNG
DSIJ Intelligence / 27 Dec 2012
A PTI report suggests that Gulf country energy firm Qatar Petroleum (QP) is interested in buying 5.2% stake in Petronet LNG. QP has expressed interest in purchasing the stake after one of the existing shareholders of Petronet, viz. Asian Development Bank (ADB) has said that it wishes to sell its stake in the company.
It is interesting to note here that QP already holds around 70% stake in RasGas, which supplies around 7.5 million metric tonne per annum (mmtpa) of Liquified Natural Gas (LNG) to Petronet. As a result, there is a possibility that QP may take undue advantage after acquiring a stake in the company. In simple words, it would mean a vendor holding a stake in the company, due to which there could be some conflict of interest with other shareholders and stakeholders of the company.Petronet LNG is registered as a private company, however 50 per cent of its stake is held by public sector entities Indian Oil Corporation, Bharat Petroleum, GAIL India and Oil & Natural Gas Corporation, each holding 12.50% stake. According to reports, these four companies had earlier shown interest in buying out the stake held by ADB, but the Oil Ministry did not give its nod, as it would effectively mean that Petronet would turn into a public sector entity. It is also being said that if PSU holding in Petronet LNG crossed 50%, it would come under the scrutiny of the official auditors CAG and the Central Vigilance Commission (CVC), which the ministry was opposed to.
We hold that if the state-run firms have a sense of confidence in the company’s growth prospects, they should be allowed to buy the stake. However, if QP buys the stake in Petronet, there would be some scepticism among other shareholders. This is not difficult to imagine, for if a vendor holds a position in the company’s board, there could a case that RasGas gets easy contracts from Petronet. There could also be a situation of price manipulation, which would not be in the interest of company as well as other vendors.
Petronet LNG has enetered into a long-term contract with Australian Exxon Mobil for the supply of around 1.50 mmtpa and has also signed agreements to import 1.50 mmtpa LNG on short-term basis from various other suppliers.
The company posted a robust set of Sept 2012 quarter numbers. Its sales increased by 41% to Rs 7548 crore, while the net profit grew by 21% to Rs 315 crore on a YoY basis. However, despite the strong financial numbers, as on Sept 30, 2012, the Foreign Institutional Investor (FII) holding in the company has come down by 100 basis points to 21.64% YoY. We would update our readers on the developments as they pan out, so watch this space.
The following table shows the major shareholders of the company:
| Shareholding Pattern As On Sept 30, 2012 | Stake (%) |
|---|---|
| Promoters | |
| Indian Oil Corporation | 12.5 |
| Bharat Petroleum Corporation | 12.5 |
| GAIL India | 12.5 |
| Oil & Natural Gas Corporation | 12.5 |
| Some Other Major Shareholders | |
| GDF International | 10 |
| Asian Development Bank | 5.2 |
| HDFC Standard Life Insurance Company | 1 |
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