Bharat Petroleum to raise stake in Petronet CCK by 26%

Bharat Petroleum Corporation Limited (BPCL) will increase its stake in Petronet CCK by 26%. BPCL has accepted the offer to buy the stake from Petronet India Limited, which is winding up its operations. After the deal, BPCL stake in Petronet CCK will go up to 52%. Once the 26% stake in Petronet CCK is bought, BPCL will have the option of completely buying out Petronet CCK and merging it with itself. In Petronet CCK, the other investors are Kochi Refineries (23%), a BPCL subsidiary, State Bank of India (4.99%), IDFC (19.97%) and IL&FS (0.04%). PricewaterhouseCoopers has completed the valuation of Petronet CCK and the report has been submitted to BPCL. Petronet India’s board has approved the stake sale and an offer has been made to BPCL. The 26% stake is estimated at around Rs. 13.53 crores.

Petronet CCK operates a 292 km petroleum product pipeline from BPCL’s Kochi refinery to the company’s oil terminal at Karur in Tamil Nadu. The company was set up under the aegis of Petronet India to construct and operate the pipeline from Kochi to Karur, with a tap-off point at Coimbatore. BPCL already has an agreement with Petronet CCK for transporting refinery products from the Kochi refinery till 2012-13.

Petronet India is a financial holding company in which Indian Oil Corporation, Hindustan Petroleum and BPCL jointly hold 50% of the equity stake. Private sector companies Essar Oil, Reliance Petroleum and other investors hold the balance equity. Petronet India was to build pipelines on the common carrier principle. However, most of the companies that were to benefit from the projects did not agree on signing take-or-pay agreements with Petronet India. With the government granting companies the freedom to set up their own pipelines, the need for Petronet India diminished leading to its plans for liquidation.

Read the article in Business Standard.

Shell buys out BPCL’s 49% stake in Bharat Shell

Shell Overseas Investments has bought out Bharat Petroleum Corporation Limited’s (BPCL) 49% stake in Bharat Shell. Both companies want to focus on their own specific lubricants brands in the growing lubricants market in India. The financial details of the deal have not been disclosed. Bharat Shell was a 51:49 JV between BPCL and Shell Overseas and was incorporated in 1993 for marketing Shell’s lubricants in the country. The joint venture has an authorized capital of Rs. 250 crores and a paid-up capital of Rs. 200 crores. Bharat Shell also markets LPG to both domestic and industrial consumers.

Read more in the Business Standard article.

Qatar’s RasGas to acquire 10% in Petronet LNG; stake valued at Rs. 460 crores

RasGas from Qatar may buy around 10%s equity stake in Petronet LNG (PLL) for a consideration of around Rs. 460 crores. PSU oil majors ONGC, BPCL, GAIL and IOC each having a 12.5 % stake in the company will divest 2.5% each to RasGas. RasGas is doing the due diligence.

RasGas is the first supplier of LNG to India and currently supplies 7.5 mn tonnes a year to Petronet’s LNG terminal at Dahej in Gujarat. RasGas and Petronet are in a 25-year sale and purchase agreement for LNG supplies. After diluting 10% stake to RasGas, BPCL, IOC, GAIL, ONGC and Gas de France will have stakes of 10% each in PLL. ADB will retain its 5.2% stake, while the remaining 34.8% lies with the Indian public.

The company requires Rs. 1700 crores for the expansion of Dahej LNG terminal from 5 mmtpa to 12 mmtpa. The company has tied up for a debt of $300 mn ($100 mn through FCCBs) and the balance would be funded by internal accruals. The company also envisages building the Kochi terminal at a cost of Rs. 2500 crores by 2010. The company has also allocated Rs. 300 crores for vessels, Rs. 460 crores for new jetty and Rs. 150 crores for solid cargo port.

Read the article in The Economic Times.