The implications as Shell acquires BG in India is that Shell gets an edge in India’s LNG market, in another development Shell confirms sale of 185 service station to independent dealers in the UK.
According to a report by livemint.com online news media, Royal Dutch Shell Plc is set to become the top foreign firm in India’s booming gas import and marketing business, following its $70-billion global acquisition of Britain’s BG Group Plc.
One of BG’s key strengths is in the logistics of liquified natural gas or LNG, which is natural gas cooled to liquid state for transport in ocean carriers.
Shell, which has a 2.5 million tonnes per annum (mtpa) LNG terminal at Hazira in Gujarat, can tap into BG’s vast global network to source and sell LNG in India.
According to Petroleum Planning and Analysis Cell (PPAC), a statistical body under the ministry of petroleum and natural gas, in the last 10 years, India’s production of natural gas rose by a meagre 14% from 21mtpa in 2004-05 (in terms of LNG equivalent) to 24 mtpa in 2013-14.
In contrast, LNG imports have risen by a massive 330% from 2.5 mtpa in 2004-05 to 10.76 mtpa in 2013-14.
The acquisition of BG puts Shell in a better position to take advantage of this growing segment.
BG’s worldwide gas infrastructure includes terminals, pipelines, specialized tankers, re-gasification facilities and strategic storage locations.
According to BG’s website, the company has multiple production sources around the world, including in north Africa, west Africa and the Caribbean, with Australia and the US soon to be added to the list. This is complemented by a fleet of around 25 owned and leased LNG carriers.
For rival BP Plc, exploration and production is a small share of its global portfolio, and the company is more keen on the gas logistics business, an India-based consultant from a US-based firm which offers consultancy services to the company said.
India’s huge gas demand is a big draw for international firms, the consultant said.
With the BG deal, Shell will now get a head-start on tapping this market. BP’s joint venture with Reliance Industries Ltd— India Gas Solutions Pvt. Ltd— which was formed for importing and marketing natural gas, is still to begin operations.
Other companies in India’s LNG market
There are two other state-run companies in India that are into the gas marketing business—Petronet LNG Ltd and Gail Ltd.
“Since India’s domestic natural gas production is not increasing, importing LNG is the only option and companies which have expertise in sourcing and selling will have an upper hand. It is after all, good for India,” said an official from a private oil and gas company, who declined to be identified. The official added that access to BG’s infrastructure will make Shell the No. 1 foreign player in the Indian gas business.
Shell declined to comment for the story.
Apart from the Hazira terminal, Shell has a technology centre and a financial business services centre in India.
Earlier this year, Shell signed agreements for a floating LNG terminal. Its downstream businesses include marketing fuels and lubricants. It also has a licence to set up 2,000 fuel outlets in India.
Separately, the Shell-BG deal makes both Shell and BP stakeholders in the upstream portfolio of RIL.
While Shell gets access to a 30% stake held by BG in the Panna-Mukta-Tapti field, BP has a 30% stake in three blocks of RIL in the east coast, including the famous D6 block.
Shell Confirms 185 service stations in the UK to independent dealers
The online site Talkingretail.com reports that Shell has announced that it has accepted offers on the sale of 185 service stations to independent dealers. It said the move follows the company’s strategic decision in September to reduce the number of Shell company-owned service stations to around 550 and expand the dealer network.
Shell confirmed that 68 service stations have been purchased by Euro Garages, and 90 bought by Motor Fuel Group. All 185 service stations are spread across Great Britain and will retain the Shell brand.
David Moss, Shell Retail general manager, North Europe, said: “Our priority is to ensure that a consistently excellent customer offer is available across our network, whether the service station is owned by Shell or by an independent dealer.
“That’s why we selected these independent dealers to work with, as they will invest in the sites and aim to deliver the same high standards of safety and customer care that are synonymous with the Shell brand.”
Euro Garages chief executive Zuber Issa said: “We look forward to working closely and extending our relationship with Shell.
“The site portfolio secured extends our UK presence and consolidates our existing forecourt estate. As a result, more customers will be able to enjoy our branded retail convenience offer, whilst still being able to access quality Shell fuels and lubricants.”
Curated by: Pamela Okeke
Business development Epoxy Oilserv Limited
pamela.okeke@epoxyoil.com
Source: Shell UK