The Hindu Business Line : Petronet to invite global bids for EPC contracts

PETRONET LNG Ltd (PLL) will float global tenders this month for engineering, procurement and construction (EPC) contracts for the expansion of Dahej terminal as well as a greenfield re-gassification terminal at Kochi and for time-chartering three more LNG tankers for hauling gas to these terminals, a top company official said.

"PLL will be coming out with global tenders for the EPC and shipping contracts by the end of the month," Mr Prasad Dasgupta, Director (Finance), PLL, told Business Line.

He said that the board of PLL had, on October 29, approved the expansion of the Dahej terminal from the existing 5 million tonnes per annum to 10 MMTPA and for creating a tanking capacity at Kochi for 5 MMPTA.

"To start with the re-gassification and all other utilities at Kochi will be for 2.5 MMTPA which will be scaled up to 5 MMTPA later," he disclosed.

Out of the three new LNG carriers to be time-chartered by PLL, two will be deployed to meet the additional capacity at Dahej, while the third tanker will be used to ship the gas to the Kochi terminal, Mr Dasgupta said.

PLL will time-charter the three LNG tankers from the successful bidder, thus obviating the need to invest in LNG ships, which at current prices costs in excess of $180 million.

"We don't want to invest in LNG ships and the new shipping tender will be on the same lines as the one executed for the Dahej terminal. It will also be in compliance with the recent guidelines issued by the Director-General of Shipping for chartering LNG tankers by LNG importers," he said.

The new shipping tender will present another opportunity for domestic shipping companies to grab a slice of the emerging LNG shipping business within the country. So far, the State-owned Shipping Corporation of India (SCI) is the only domestic entity to have managed a foothold into this highly lucrative area of shipping, marked by long-term contracts ranging from 20 to 25 years.

The consortium comprising Mitsui O.S.K.Lines-NYK Line-K Line-SCI had bagged the 25-year shipping contract from PLL for its Dahej terminal involving two 1,38,000 cubic metre capacity each LNG tankers at a charter hire rate of $68,900 per day for each tanker. The charter rate has an escalation factor linked to the United States Consumer Price Index (US-CPI) within an over-all cap of 3 per cent compounded annually.

While the first of the two tankers is already in operation, ferrying gas from Qatar's RasGas, the second tanker will be deployed in December.

PLL will source the additional LNG requirements for its Dahej terminal and the greenfield Kochi terminal either from RasGas provided it is given on the same terms as the original contract for the purchase of 5 MMTPA of LNG from RasGas for the Dahej terminal or from any of the three suppliers with whom PLL is currently negotiating to buy the LNG, Mr Dasgupta said without divulging the names of these suppliers.

PLL is also counting on the 5 MMTPA of LNG purchased from Iran by a consortium of IOC-ONGC-Gail on a Government-to-Government basis to meet its needs. This deal is expected to be finalised shortly. According to Mr Dasgupta, IOC-ONGC-Gail will have no choice but to bring the LNG procured from Iran to the re-gassification terminals of PLL.

The capacity expansion at Dahej is expected to be completed by 36 months and the expanded capacity will be available for users in March 2008, whereas the Kochi terminal will take 42 months for construction and commissioning.

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