India's refiner Indian Oil and gas utility Gail (India) have signed a memorandum of understanding (MoU) to jointly acquire 50% stake in a liquefied natural gas (LNG) terminal being built at Dhamra Port in the Indian state of Odisha.

Designed to 5 million tons of natural gas receiving, storage and regasification capacity, the Dhamra LNG terminal is being built by Adani group.

As part of the MoU, Indian Oil will have 39% stake in the project while Gail would acquire 11% equity. The remaining 50% stake will be held by Adani. 

Financial terms of the deal were not disclosed.

At a later stage, Indian Oil and Adani plans to divest 1% stake each to a financial institution.

Indian Oil chairman B Ashok was reported by Reuters as saying that the LNG terminal, which would cost Rs60bn ($895m), is planned to be commissioned by 2019.

The LNG terminal is designed to supply gas to three oil refineries of IndianOil located situated in Barauni, Bihar; Haldia, West Bengal; and Paradip, Odisha.

Additionally, the terminal will supply feedstock to fertiliser plants at Barauni, Sindri and Gorakhpur, Indian Oil said.

Meanwhile, Indian Cabinet Committee on Economic Affairs has approved Rs51.7bn ($770m) capital grant, accounting for 40% of the investment required for Gail’s Jagdishpur-Haldia and Bokaro-Dhamra Pipeline (JHBDPL) project.

Planned to be commissioned by the end of the decade, the 2,539km JHBDPL will connect Uttar Prades, Bihar, Jharkhand, West Bengal and Odisha.

Image: Officials from Indian Oil, Gail, and Adani during MoU signing ceremony. Photo: courtesy of Indian Oil Corporation Ltd.