Shell joins India LNG project with raised 26 pct stake

NEW DELHI, Jan 15 (Reuters) - Royal Dutch Shell Plc (Xetra: R6C1.DE - news) will take a 26 percent stake in the planned Kakinada liquefied natural gas terminal on the east coast, an official at partner Indian gas firm GAIL said, slightly higher than previously proposed.

Gaz de France already has a 26 percent stake in the project, while Andhra Pradesh Gas Distribution Company in which GAIL Gas, a subsidiary of GAIL (India), has a stake will have the remaining 48 percent share.

Shell (LSE: RDSB.L - news) was in talks with Andhra Pradesh state government to buy up to 24 percent stake in the project, GAIL chairman B.C. Tripathi said last year.

Shell, GDF and GAIL on Thursday also signed an agreement to procure LNG for the project.

The 3.5-million-tonne a year floating storage and regasification unit (FSRU), was conceived in 2012.

"We can operate the FSRU at an annual capacity of 5 million tonnes." Prabhat Singh, head of marketing at GAIL (India) told reporters.

He said a decision had yet to be taken whether to lease the FSRU or buy it.

Shell in 2012 signed a preliminary deal with Reliance Power to build an LNG terminal in Andhra Pradesh but the Indian firm backed out of the project in 2013.

The peak power deficit in Southern India stood at 8.7 percent in April-December, according to a government report, as many plants operate below capacity because of fuel shortages.

As much as 24,148 megawatts of gas-based generation capacity have been stranded because of a lack of fuel, a government statement said in September last year.

Indian Prime Minister Narendra Modi's government is committed to providing uninterrupted power to all India by the end of its five-year term. (Reporting by Nidhi Verma, editing by William Hardy)