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Tata Firm Picks Up 10% Stake In Rs 5,900 Crore Swan LNG Project 

Tata Realty buys 10% stake in floating LNG import terminal being set up Swan Energy.

 Workers secure the mooring ropes of a liquefied natural gas (LNG) tanker to bollards as it docks at the LNG terminal of the Haldia Dock Complex (HDC), part of the Kolkata Port Trust, in Haldia, West Bengal, India. (Photographer: Sanjit Das/Bloomberg)
Workers secure the mooring ropes of a liquefied natural gas (LNG) tanker to bollards as it docks at the LNG terminal of the Haldia Dock Complex (HDC), part of the Kolkata Port Trust, in Haldia, West Bengal, India. (Photographer: Sanjit Das/Bloomberg)

In the first investment decision since N Chandrasekaran named as the Tata Group chief, Tata Realty and Infrastructure Ltd. (TRIL) is taking 10 percent stake in a Rs 5,900 crore floating LNG import terminal being set up by Nikhil Merchant-led Swan Energy Ltd. in Gujarat.

This will be the first investment by Tata Group in the gas business.

TRIL, which was set up in 2007 to pursue opportunities in the real estate and infrastructure sectors, is a wholly-owned subsidiary of Tata Sons Ltd., the holding company of the Tata Group.

In a stock exchange filing, Swan Energy said it has "received an Expression of Interest (EOI) from Tata Realty and Infrastructure Ltd., showing its willingness to invest up to 10 percent of the equity" Swan LNG Pvt Ltd. -- the company setting up the Floating and Regasification Unit (FSRU) near Jafrabad in Gujarat.

Ahead of the move, the authorised share capital of Swan LNG Pvt Ltd. "has been increased from Rs 5 lakh to Rs 2,000 crore," Swan Energy said in a separate filing.

At par value, Tata investment will cost Rs 200 crore.

Last week, Tata Consultancy Services Ltd. (TCS) Chief Executive Officer Natarajan Chandrasekaran was named the next chairman of Tata Sons. He came in place of Cyrus Mistry who was unceremoniously ousted in October last year.

On Swan's LNG project, Gujarat government had picked 26 percent equity the LNG project. The Gujarat government participation in the project was through Gujarat State Petronet Ltd. and Gujarat Maritime Board jointly.

State-owned Oil and Natural Gas Corporation Ltd., Indian Oil Corporation Ltd. and Bharat Petroleum Corporation Ltd. have already booked 60 percent of the capacity of 5 million tonnes a year LNG terminal.

The three firms have signed an agreement to import 1 million tonnes per annum of their own liquefied natural gas (LNG) at the Swan terminal. Gujarat State Petroleum Corp Ltd (GSPC) too is in talks to take 1.5 million tonnes capacity in the FSRU.

The companies hiring the capacity will bring their own LNG from abroad and pay Swan a tolling fee. Swan Energy is building the project in joint venture with Exmar of Belgium, which holds 38 percent stake in the project.

Swan is targeting 2019 for commissioning of the one jetty-moored FSRU at Jafrabad. It plans to expand the capacity to 10 million tonnes through the deployment of a second FSRU.

Last month, Swan had in a regulatory filing stated that it has signed a memorandum of understanding with Petronas and Alpha Energy for development of 20 trillion cubic feet Sephied Baghun gas field in Iran at an investment of $615 million.

The project, besides involving constructing infrastructure necessary to put the field into production, would also involve building an offshore gas liquefaction facilities (OLNG) that will convert the gas into its liquid form (LNG) for transporting it in ships to consumption centers.

"Swan will offtake around one million tonnes per year of LNG produced by the OLNG, which will be delivered to the FSRU built by Swan in Gujarat," it had said on December 14.