Shell pursues gas grid stake despite "setback"

Vol 5, PW 8 (06 Jun 01) Midstream & Downstream

Shell meanwhile, is "vigorously pursuing" plans to invest in Gujarat State Petronet, despite reports that the Foreign Investment Promotion Board has blocked its application.

On 21st May the Economic Times reported that Shell had suffered a "massive setback" when the Foreign Investment Promotion Board rejected its application following an objection from the oil ministry that it "conflicts with the Gujarat Gas Act." We can confirm the FIPB rejected Shell's original application in March - not because it conflicted with the gas act, but because the ministry questioned the legality of the act itself, a subtle but crucial difference. At that time the Gujarat Gas Act was still at the "Ordinance" stage and the oil ministry was objecting to references of Gujarat State Petronet being (i) a monopoly company for gas pipelines (ii) Gujarat owning 50% or more.

By 28th April these references had been dropped and the act was passed in the local parliament and published in the 'Government of Gujarat Gazette'. Unclear is if, or when, Shell will re-submit an application for an investment in Gujarat State Petronet.

It's now waiting for the outcome of an application filed on 23rd April to set up a new company to buy and sell LNG. Two other multinationals have an interest in Gujarat State Petronet, but only Gaz de France has received FIPB approval.

British Gas has yet to apply.

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