The Hindu Business Line : TotalFina in talks with Exxon to buy out LPG business

OIL major TotalFinaElf is in talks with Exxon Mobil for buying out the latter's LPG business in India. The deal is likely to be completed within a "couple of weeks", according to a TotalFinaElf official.

"We are negotiating for buying out Exxon Mobil's India LPG business," confirmed Mr Jean Claude Breton, TotalFinaElf's Chief Executive in India.

"The negotiations began at the companies' regional headquarters in Singapore, but have now shifted to India. We expect an outcome within the next two weeks," he said.

TotalFinaElf Gas India will not be buying out the LPG assets of Mobil Peeves Petroleum, Exxon's joint venture with an NRI from Kerala.

The deal will involve "buying out the volumes" and taking over Mobil Peeves's 60 LPG dealerships in India.

It would not take over Exxon's commitment to build the proposed LPG import terminal in Kerala, Mr Breton said.

"It is not a conventional buyout. We are not interested in the company's assets and would be negotiating only for its volumes," he said.

The deal, once completed is expected to increase TotalFinaElf's volumes by another 50 per cent. Last year, TotalFinaElf had LPG sales volumes of 33,000 tonnes in the Indian market.

The company's business, like most private LPG business in India, is predominantly based in the South. Elf Gas India Ltd has already commissioned its LPG import terminal along with a bottling plant in Mangalore in Karnataka, apart from LPG cavern at Visakhapatnam in Andhra Pradesh, which is a joint venture with Hindustan Petroleum Corporation Ltd.

According to estimates, private LPG companies hold only two to three per cent market share in the domestic segment. In the commercial segment, their share is said to be about 20 per cent.

Domestic LPG forms around 90 per cent of the total LPG business. The deal, if through, will make TotalFinaElf the second largest private player in the domestic LPG market.

Private LPG companies have a cumulative investment of Rs 1,100 crore in import terminals and LPG bottling plants. At present, the price of LPG marketed by private sector companies is higher by about Rs 75 per cylinder.

The PSUs, on the other hand, charge lower prices because of subsidies reimbursed through the oil pool.

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