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GAIL to invest in ships for US LNG imports

LNG Industry,

GAIL (India) intends to invest an estimated US$ 7.57 billion in hiring a fleet of LNG ships to transport gas from the US to India for 20 years, commencing in 2017.

GAIL will soon float tenders to award contract by November 2014. The cost excludes fuel, canal and port call charges, which will be covered by the company, and are estimated to be in the region of US$ 30 million.

The state-owned energy company has tied up 5.8 million tpa of LNG imports from the US starting in 2017.


“It’s been decided to charter ‘new build’ ships to transport gas from the US. Step-in right (to GAIL) in the ownership of LNG ships would only be possible for new build ships. Since fuel and other charges are to the charterer's account, GAIL is looking at chartering fuel-efficient ships,” according to an official.

GAIL is considering the acquisition of equity stakes of up to 10% in the ships. There is also a plan to bring Shipping Corporation of India into the venture with the option of the state-run entity taking up stakes (up to 26%) in the ships.

LNG carriers

Currently, there are approximately 379 LNG ships operating globally and another 105 ships are being built or have been ordered. The majority of LNG carriers are built in South Korea and Japan by companies including Samsung Heavy Industries, Daewoo Shipbuilding and Marine Engineering, Hyundai Heavy Industries, Mitsubishi Heavy Industry, STX and Hanjin Shipyard.

Indian companies L&T and Pipavav had expressed interests in taking orders to build LNG vessels. GAIL appointed Lloyd's Register to carry out assessments to investigate whether Indian shipyards have the requisite capability of building LNG carrier. According to Lloyd’s Register, both L&T and Pipavav would need to create new infrastructure to build these vessels.

US LNG contracts

In December 2011, GAIL signed a deal with Cheniere Energy to buy 3.5 million tpa of LNG from the Sabine Pass Terminal in Louisiana. Deliveries are due to start between March and August 2018.

In April 2013, GAIL booked a further 2.3 million tpa capacity to export LNG from the Dominion Cove Point terminal in Maryland, delivery of which is expected from September 2017.

Edited from various sources by Katie Woodward

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