India's oil and gas sector has been gaining global attention for some time now. In the latest development, french oil major Total has agreed to acquire a 37.4 per cent stake in Gautam Adani-led Adani Gas for about Rs 5,700 crore. The decision has heated up the competition to take a pie of India's oil and gas sector as global major Shell and British Petroleum is already operating in India. Moreover, Saudi based Armaco has also been discussing the proposed acquiring of 20 percent in Reliance Industries Ltd.
Further, another oil and gas major ExxonMobil has also signed a memorandum of understanding (MoU) with Indian Oil Corporation to expand the LNG business in India. This tie-up is aimed at exploring new models of delivering cost-effective natural gas in India. The deals show the interests of global companies in India. Behemoths like Saudi Aramco, ADNOC, BP, Shell, and Rosneft are either working in India or have shown their interest, making India a preferred destination.
As per a report in financial daily, Business Standard, Total SA will buy the stakes in Adani Gas through a tender offer to public shareholders to acquire up to 25.2 per cent shares. The remaining 12.2 percent would be bought from the Adani promoter family. Interestingly, the deal will be the largest foreign direct investment in India's city gas distribution. In a statement, Adani gas said, "Adani Family and Total shareholders shall ultimately hold 37.4 per cent each and public shareholders shall hold remaining 25.2 per cent."
Total Chief Executive Officer Patrick Pouyanne said that two companies will take at least six months to materialize the deal. He added, "Indian regulation for listed companies is a little complex and it will take more than six months to take the shares. In terms of the company's liquefied natural gas (LNG) business, the company has a cash flow of $2 billion and we have a target to increase to $6 billion by 2025 and Indian market will contribute to this goal."
Besides its deal with Total SA, Adani Gas is also considering to set up 1,500 fuel across India in the coming years. The partnership is targeted at developing regasification terminals including Dhamra LNG, on the East coast of India; market LNG to the Indian markets and through Adani Gas. The deal also has an ambitious target of distributing gas to 7.5 per cent of the country's population. Markets also responded positively to the agreement with Shares of Adani Gas jumping more than 3 percent intraday on October 15, taking total two-day gains to 13 percent.
