12-11-2016

Gail to take a different course on LNG vessels

GAIL

Gas importer Gail (India) is expected to issue a tender for chartered LNG carriers after giving up on a two-year-plus effort to build the vessels it requires to ship the volumes the company is buying from US projects.

Sources close to the business say Gail officials have indicated the company will go out to market for up to six LNG carriers to take on short charter hire for periods of around three years, with options attached.

The tender is expected to be handled by Shipping Corp of India (SCI), which has greater experience on LNG tonnage and is likely to be able to operate a more flexible process than tightly controlled and state-run Gail.

The timing and exact details of the business are not yet clear but those following Gail suggest a tender could be issued early next month or possibly at the start of the new year.

But those following the business say any LNG ship chartering by Gail is likely to be a stop-gap exercise to buy the company time before it takes another look at securing LNG newbuildings.

Gail needs to move to secure LNG tonnage as the company has signed up to buy 3.5 million tonnes per annum (mtpa) from Cheniere Energy’s Sabine Pass LNG project in the US, with the first of these cargoes scheduled for delivery from 2018.
The company also has booked 2.3-mtpa from the Cove Point LNG plant in Maryland, which is set to start exporting these volumes from the end of next year.

Adding to the confusion on the company’s tonnage requirement is a separate LNG optimisation process being run by Gail under which the company is trying to swap some of its US-contracted volumes with counterparties in an effort to shorten the shipping distances.

Source: Khabar India

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