Shell's Indian arm says eyeing Enron LNG unit
Anglo-Dutch energy giant Royal Dutch Shell is keen to buy the liquefied natural gas terminal of bankrupt energy group Enron Corp's Indian unit, a Shell spokesman said on Tuesday.
Shell has informed Dabhol Power Company, the Industrial Development Bank of India, a key lender to the project, and the federal government of its interest, the spokesman told Reuters from New Delhi.
Dabhol is owned 65 per cent by Enron.
"LNG is the fuel of the future. We believe there is a sizeable market for LNG in India," he added.
The development comes at a time when Enron, which filed for Chapter 11 bankruptcy in the United States on Sunday, needs cash desperately to meet mounting debt repayments and to continue skeleton operations.
The company secured $1.5 billion in emergency finance on Monday from two of its major creditors J.P. Morgan Chase and Citigroup but is seeking more cash.
Dabhol is building a 5.5 million tonne LNG terminal alongside its 2,184 MW power plant on the west coast. The total cost of the project is $2.9 billion.
Work on the terminal and the power plant, which is 97-per cent complete, was halted in June this year after a dispute with a local utility. That dispute, which still rages on, caused Enron and its US partners, General Electric Co and Bechtel, to offer the entire 85-per cent equity they held in Dabhol for sale.
The Shell spokesman said the offer for the LNG terminal project does not mean they would not consider buying a stake in the power project.
"Our current proposal is for the LNG plant. It does not mean we would not consider the power project in the future if offered," he added.
The LNG unit is a part of the power plant and Enron's offer for sale of equity is for the entire project, but domestic media have speculated recently that the lenders may persuade the U.S. company to hive it off and sell it separately.
The Times of India, a leading Indian daily, said in a report on Tuesday Shell, BG Group Plc and the Gas Authority of India Ltd, had expressed interest in buying the LNG terminal.
"All three companies, in separate meetings with ministry officials, expressed their keen desire to acquire the terminal and also set up pipelines for the distribution of LNG across the country," the paper said, quoting a senior official from the ministry of power.
GAIL and BG officials could not be reached for comments.
A Dabhol spokesman told Reuters that his company had no comment over the report but reiterated that Enron's proposal was for the sale of equity in the composite project.
YOU MAY ALSO WANT TO READ: