The Gas Authority of India Ltd (GAIL) signed a joint venture agreement with China Gas Holdings Ltd on Tuesday to jointly pursue compressed natural gas (CNG), city gas projects, coal bed methane (CBM) opportunities and pipeline and LNG projects in China, India and other countries. It was signed by GAIL's director (finance) RK Goel and China Gas managing director Liu Ming Hui.
Speaking on the occasion, GAIL chairman and managing director UD Choubey said following the joint venture action should be speeded up on the city gas front. He suggested the joint venture could look into jointly working in the area of modular LNG systems, which China Gas had been using.
Liu Ming Hui said GAIL was one of the first overseas strategic investors in the company, and China Gas looked forward to working with GAIL in India and other countries.
It may be recalled that in May 2005, GAIL had made a strategic investment in China Gas by acquiring 210 million shares and it currently holds around 7 per cent equity interest in China Gas. GAIL also received dividend from China as for 2005-06.
The board of joint venture company would comprise of four directors, two from each company. The chairman of the Board shall first be nominated by GAIL and such nomination would rotate between GAIL and China Gas in every two years.
CNG and CBM project have initially been identified by the joint venture. After the due diligence study for the projects, the JV shall be identified and implemented by the JV. “Project-specific JVs will be formed along with local government or companies, wherever required,” the release said.
GAIL and China as recognize the potential of adding value to their businesses by cooperation approach based on their complementary skills and strengths to jointly exploit city gas/CNG and CBM opportunities. GAIL’s expertise in the midstream an downstream gas sector and China Gas’s track record in securing contracts and rapid expansion shall be leveraged to make the JV a successful company, officials stated.