The Union Cabinet on Thursday approved the proposal of ONGC Videsh Ltd. (OVL) and GAIL (India) Ltd. to pick up 12.5 per cent stake in the China pipeline project in Myanmar. It also allowed the two entities to invest $1 billion more in fields that will provide gas to be shipped to China through the pipeline.
The Cabinet Committee on Economic Affairs (CCEA) headed by Prime Minister Manmohan Singh allowed OVL to invest $167.84 million in taking 8.35 per cent stake in the pipeline. GAIL would invest $83.88 million for taking 4.17 per cent stake in the pipeline being constructed by China National Petroleum Corporation (CNPC) to transport gas found in block A-1 and A-3 off the Myanmar coast, an official spokesman said. CNPC is building the $2.01-billion pipeline to ship gas from these blocks, where OVL and GAIL hold 17 per cent and 8.5 per cent stake, respectively. Gas from the blocks would be sold to China for $7.72 per million British thermal unit at the landfall point in Myanmar.
CNPC had offered 49 per cent stake to the consortium developing gas the said fields. South Korea's Daewoo Corporation holds 51 per cent stake each in Block A-1 and A-3, while OVL has 17 per cent stake. GAIL and Korea Gas Corp have 8.5 per cent each while the remaining 15 per cent is with Myanmar's Myanma Oil and Gas Enterprise (MOGE). The consortium is investing $3.61 billion in bringing to production gas fields in the two blocks. The 49 per cent stake is being apportioned in the same ratio as individual stakes in Block A-1 and A-3. The CCEA also authorised ONGC to provide finance/guarantee support for additional investments by OVL in the project to the extent of $832.54 million.
