BG to dispose of stake in Gujarat Gas BG Group has moved further towards hitting its self-imposed $5bn capital release target by agreeing the sale of its 65 per cent stake in Gujarat Gas to India's Gujarat State Petroleum Corporation for Rs24.6bn ($470m). The deal takes BG to within $1bn of the $5bn target following a number of disposals this year aimed at reducing its gearing as it pursues a capital investment programme of $23.5bn over this year and next centred on developing gas fields in Australia and oil projects off the coast of Brazil. Sir Frank Chapman, chief executive, has expressed his confidence that the $5bn target can be hit by the time he presents his last set of annual results next February ahead of his retirement. In May, the FTSE 100 oil and gas producer agreed the disposal of a 60 per cent stake in Brazilian gas distributor Comgás to Brazilian group Cosan for about $1.8bn. The Comgás deal has supplied $2.9bn towards the $5bn target thanks to a $1.1bn debt release. Further agreements by BG to sell its 40 per cent equity stake in gas-fired power generation plants in the Philippines will raise a further $360m, and the sale of 40 per cent interest in a Chilean liquefied natural gas terminal for about $350m had taken BG up to $3.6bn of its target by the half-way stage. In spite of a run of successful disposals, BG has so far failed to attract interest in the proposed sale of a minority sale at its Australian LNG project centred around Curtis Island in Queensland which has informally been up for sale since March. The sale of the Indian asset, one of a number of downstream distribution businesses no longer viewed as core to BG's future, has been struck at a lower price than some observers suggested might be achieved. In April, Spanish utility Gas Natural Fenosa considered a bid for the stake in Gujarat Gas, India's largest private sector gas distributor company. Speculation over that deal suggested that it could be valued at up to $900m as analysts said BG expected the final bidder to pay a $200m premium over the then market price of $700m. The final sale price reflected both the depressed equity market environment and the fact that the asset has been on the market since December, when BG was reported to be expecting $600m for the stake, said Arvind Mahajan, head of energy at KPMG India. "Since we've seen that it's been on the market for a time, the buyers may have seen this as an opportunity to renegotiate the price to a level they feel more comfortable with," Mr Mahajan said. The state-run company will acquire the stake through a new wholly owned subsidiary, GSPC Distribution Networks Limited, taking control of Gujarat Gas" network of nearly 350,000 natural gas consumers in the western state. "The Gujarat market . . . is one of the largest gas markets in India - and this will help [Gujarat State Petroleum Corporation] more or less dominate that market in some sense," said Mr Mahajan.