GAIL (India) Ltd, has begun discussions with Canada's InterOil Corp. (IOC) on the purchase of a stake in the latter's liquefied natural gas project in Papua New Guinea, a person familiar with the matter said Monday.
The Indian state-run firm has joined a growing number of Asian firms keen on acquiring a strategic stake in the next big liquefied natural gas project in Papua New Guinea to secure future supplies.
"The discussions are at a preliminary stage...It's going to be a strategic investment. Gail plans to ship LNG back to India from Papua New Guinea," said the person, who declined to be named.
China National Offshore Oil Corp. and India's Petronet LNG Ltd. (532522.BY) have also expressed interest in joining the project, which has been proposed by Liquid Niugini Gas Ltd., a consortium of companies including InterOil, and approved by the prime minister of Papua New Guinea.
"InterOil's CEO has met the GAIL team two-three times...They've offered GAIL a 2.5% stake in the project and an equivalent commitment of LNG," the person said.
But GAIL is keen to secure a larger portion of the plant's LNG output to supply to its customers back home.
"GAIL wants at least 10% of the total gas from the project. It's open to negotiate for a bigger stake as well," he said.
GAIL's investment in the project will ultimately depend on the size of its stake in the $5-$6 billion project, he said.
PNG-owned Petromin PNG Holdings Ltd., which has a stake in the LNG project along with InterOil, said in April that China National Offshore Oil Corp. had signed an agreement for "commercial cooperation" in the development of the proposed project.
A separate Exxon Mobil Corp.-led LNG project in Papua New Guinea is considered the more advanced, as it has clinched preliminary gas sales agreements with customers in China, Japan and Taiwan.