Europe's largest oil company Royal Dutch Shell (RYDAF) and French firm GDF Suez are likely to take 26 percent stake each in GAIL India Ltd’s proposed ‘floating LNG import terminal’ at Kakinada in Andhra Pradesh.

Andhra Pradesh Gas Distribution Corp (APGDC) – a joint venture of GAIL Gas and Andhra Pradesh Gas Infrastructure Corp (APGIC) will have the remaining 48% share.

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.

The partners will bring an FSRU, import gas in its liquefied form (LNG or liquefied natural gas) in ships to the terminal, pipe it to land and sell in Anhra Pradesh and beyond.

The start of work on the Kakinada FSRU would mean that Petronet LNG Ltd will have to put off, at least, for the time being its proposed 5 million tons a year LNG import facility at Gangavaram in the same state.

In 2013, Shell tried to expand operations in India by constructing a floating LNG terminal which was expected to produce around five million tons of natural gas per annum. The deal was expected to be signed with the Reliance Power of the Reliance Group owned by Anil Ambani.

However, some circumstances resulted in the deal to be called off by Reliance Power, allowing Shell to join the LNG project headed by GAIL.

While Shell already operates a 5 million tonne LNG import facility at Hazira in Gujarat, GDF Suez is present in India in the natural gas business since 1997, with a 10 per cent stake in Petronet, the owner of LNG import terminals in Dahej and Kochi.