17-08-2017

Japan’s Mitsui OSK Lines eyes 11% stake in Swan LNG project

lng

Mitsui OSK Lines, one of Japan’s biggest shipping companies, is looking to buy as much as 11% stake in a Rs4,000-crore LNG terminal being built by Swan LNG Pvt. Ltd in Gujarat, according to a company proposal and four people close to the development.

In parallel, two Gujarat government entities—state maritime regulator Gujarat Maritime Board (GMB) and Gujarat State Petronet Ltd (GSPL)—are also planning to buy another 15% and 11% stake, respectively in Swan LNG, according to two senior state government officials.

Mitsui and its affiliates will pick up 11% in the project, and the Japanese company will be a technical consultant for the project, Swan Energy said in a proposal submitted to the state government. Mitsui will also supervise construction of the terminal’s floating, storage and regasification unit (FSRU), which will be built at a shipyard in South Korea.

According to the proposal, after the stake sales, the company’s stake in the LNG project will come down to 63%.

Swan LNG is a fully owned special purpose vehicle set up for the project by the Nikhil Merchant-led Swan Energy.

A Swan Energy executive, one of the four people quoted above confirmed the company was in close talks with Mitsui OSK Lines for the stake sale, but did not reveal more details. He declined to be identified.

A senior executive of Swan Energy when contacted declined to comment on the matter.

An email query sent to Mitsui OSK remained unanswered.

The boards of GMB and GSPL approved the proposals last week for picking up stake in the LNG project and are awaiting final nod from the state government.

“The state government is looking to pick 26% stake in the LNG project. Of this, GMB will pick 15%. Work at the project site including dredging has begun on what is set to be the country’s first floating LNG terminal,” said Ajay Bhadoo, vice-chairman and chief executive officer of GMB.

Following a government directive, GSPL has initiated the process for buying stake in the project, T. Natarajan, joint managing director of GSPL said.

“It is a strategic investment for GSPL. As per the plans, Gujarat State Petroleum Corp. Ltd (GSPC) will also take a fixed amount of gas from the LNG terminal,” said Natarajan, who is also joint managing director of GSPC.

The project cost has also been revised from Rs5,900 crore to about Rs4,000 crore, two of the four people cited above said.

On 14 December, Swan Energy said it has tied up with Petronas of Malaysia and Alpha Energy of Singapore to develop Iran’s 20 trillion cubic ft. Sephied Baghun gas field at a cost of $615 million, which will be liquified into LNG offshore.

Swan would take around 1 million tonnes per annum (MTPA) of LNG, which will be delivered to the country’s FSRU coming up off the Gujarat coast.

The capacity of the terminal, which will be initially 5 MTPA, can be doubled by deploying another FSRU, according to project details submitted to the state government by Swan Energy.

On 17 January, Swan Energy had said in a stock exchange filing that Tata Realty and Infrastructure Ltd had shown willingness to invest up to 10% equity in the Swan LNG Project.

Earlier, Belgium’s Exmar had evinced interest in the LNG project which included equity sharing; however the deal did not materialize, the Swan official quoted earlier said.

The company has already entered into land lease and concession agreements with the maritime board regulator, mandatory for any private port operator to set up operations in the state. Earlier this month, Swan Energy said in a stock exchange filing that Swan LNG Pvt. Ltd had awarded contracts worth Rs.459 crore for construction of the FSRU to Black & Veatch.

Swan LNG aims to complete the first FSRU terminal by 2019 but the company has already booked capacities of about 4.5 million tonnes, giving it the much needed backing to complete the project.

While GSPC, a Gujarat government run company, is looking to buy 1.5 million tonnes a year from the FSRU, three central government PSUs have shown interest in buying 1 million tonnes a year for each of them, a state government official said, on condition of anonymity.

Source: Live Mint 

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