Shell quiet on Kakinada FSRU exit speculation

Vol 19, PW 26 (08 Sep 16) Midstream & Downstream

Shell denies it, but rumours are rife the Anglo-Dutch major has walked away or is planning to walk away from a planned FSRU project off Kakinada in Andhra Pradesh where it partners GAIL, GDF Suez and the Andhra Pradesh Gas Distribution Corporation (APGDC).

A Shell source tells us the project is handled by its Dubai office. "We have a lot of businesses in India which are in different gear at any given point of time," he says.

"You can't expect a person to know everything." Another consortium source however tells us all is not well between Shell and its partners. "There are a lot of complex issues," he says.

"One of them is Shell's insistence on a 'take or pay' contract (with APGDC) for the LNG it brings to Kakinada. That was six months ago and I don't think there's been any progress since." But a source at APGDC, a 50:50 joint venture between GAIL and the Andhra government, says it "won't be easy" for Shell to walk away.

"As far as I know," he says, "Shell is still there." He expresses confidence the consortium will go ahead and implement the project. Another consortium source echoes the sentiment, saying Shell is yet to formally opt out.

"But a clearer picture will emerge only in the next 15 days," he says.

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