The Asian Development Bank wants to sell its stake in Petronet LNG Ltd. (532522.BY) and has written letters to the company's major shareholders about its decision, a senior company executive said Monday.

"We got a letter from ADB last week, which they have written to all the promoters, on their plans for equity divestment," a senior company executive, who didn't wish to be identified, told Dow Jones Newswires.

Asian Development Bank holds 5.2% stake in Petronet. Its stake in India's largest liquefied natural gas importer is worth INR4.44 billion ($95.5 million) based on Friday's closing price of INR113.85.

State-run Indian Oil Corp. (530965.BY), Bharat Petroleum Corp. (500547.BY), GAIL (India) Ltd. (532155.BY) and Oil & Natural Gas Corp. (500312.BY), each hold 12.5% stake in Petronet, taking their total to 50%. French group GDF holds another 10% in the company.

India's demand for the cleaner fuel is expected to rise as the country ramps up capacity in gas-based power generation plants, expands refineries and steel plants. The country's current gas consumption is around 170 million standard cubic meters a day, out of which 142 MMSCMD is produced locally and the rest is imported.

Petronet owns a 10-million-ton-a-year liquefied natural gas terminal at Dahej in Gujarat. It is building a 2.5-million-ton-a-year terminal at Kochi in the southern state of Kerala that is likely to be commissioned by the middle of 2012.

Asian Development Bank didn't immediately respond to questions sent via e-mail.

A senior executive of Asian Development Bank in August said that the international development finance institution is likely to decide on what it will do with its holding in Petronet in two to three months.

On Aug. 25, Shantanu Chakraborty resigned as Asian Development Bank's nominee on Petronet's board.

The executive of Petronet told Dow Jones Newswires that the lender has communicated that it wouldn't like to have another board nominee as it is considering selling its stake.

The promoters have the first right of refusal according to the shareholders' agreement, which is why Asian Development Bank has informed them, the Petronet executive added.

"All the promoters are now examining it and they will take a call."

When asked about why Asian Development Bank would possibly be exiting its stake in the company, the executive said: "ADB usually associates with projects at the initial stages. And when projects grow and stabilize, they exit."

The official said the exit of Asian Development Bank as a shareholder won't have any impact on operations, but that Petronet would like the international project lender to continue to be part of the company.

"Their association imparts a lot of value to business," the executive said.

Petronet received its first spot cargo in 2010 a few days ago from Qatar's Ras Laffan Liquefied Natural Gas Co., known as RasGas, the executive also said.

Petronet sold the cargo to GAIL.

The liquefied natural gas importer expects to get another spot cargo from Nigeria next month, the executive said.

Petronet Chief Executive Ashok Balyan said on Aug. 20 that the company plans to buy spot cargo as there is a local supply shortfall in production after a suspension in India's Panna-Mukta fields.

BG India, a unit of BG Group PLC, halted production of oil and gas at the Panna-Mukta fields, off the west coast, on July 20 because of a leak in an undersea pipeline.

Prior to the suspension, the fields produced about 35,000 barrels of oil and 205 million metric standard cubic feet of gas a day.

- By Rakesh Sharma, Dow Jones Newswires; +91-11-4356-3334; rakesh.sharma@dowjones.com
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