The diversification plan has been unveiled in the tender conditions stipulated by Petronet.

P. Manoj

Bangalore, March 6

Natural gas importer Petronet LNG Ltd (PLL) plans to float a shipping subsidiary overseas to haul gas to its greenfield re-gassification terminal of 2.5 million tonnes per annum capacity proposed at Kochi in Kerala.

The diversification plan has been unveiled in the tender conditions stipulated by Petronet for selecting ship owners and operators for transporting LNG to the Kochi terminal.

"The tender conditions says that Petronet may hold up to 49 per cent stake in the company formed by the successful ship-owning and operating consortium. The balance 51 per cent would be distributed among the ship-owners and operators. The subsidiary, to be registered in tax havens such as Cayman Islands or Malta, would thus become a deemed Indian shipping company," an industry official pointed out.

This is a departure from the first two shipping tenders finalised by Petronet for hauling gas from RasGas in Qatar to Dahej in Gujarat, wherein it holds a 15 per cent stake each in the first two tankers and 23 per cent stake in the third tanker.

"The next logical synergy with what Petronet is doing is to go upstream or downstream and get a portion of the LNG value chain. We are too small a player to enter gas fields or liquefaction, which are beyond our financial capability. So, looking at the size of Petronet, it could be either shipping or pipelines. GAIL is already in pipelines so we don't see much scope there. So, what remains of this logical diversification is shipping," Mr Prosad Dasgupta, CEO and MD, Petronet told

Business Line

.

The recent tender floated by Petronet for time chartering two LNG tankers of 165,000 to 175,000 cubic metre capacity each from ship owners and operators to ship gas to Kochi for 25 years has attracted 14 bidders out of which seven have been pre-qualified, Mr Dasgupta disclosed.

Those who have been pre-qualified includes state-run Shipping Corporation of India (SCI) with its longstanding Japanese partners Mitsui O.S.K.Lines-NYKLine-K Line, Malaysia International Shipping Corporation Bhd, A P MoellerGroup, German ship management firm Pronav, Teekay Shipping Corp, the consortium comprising Belgian natural gas shipping firm Exmar- Indian Oil Corporation-Gail and Dubai-based Emirates Trading Agency.

LNG IMPORT NORMS CHANGED

With the Union Cabinet granting flexibility to LNG importers in November last year to import gas either on f.o.b or on c.i.f basis and to deploy foreign flag vessels for transporting the cargo, the presence of an Indian shipping company in the ship owning and operating consortium is no longer a mandatory requirement.

As such, apart from SCI, other leading domestic ship owners such as Great Eastern Shipping Company Ltd, Varun Shipping Company Ltd and Essar Shipping Ltd have stayed away from submitting their RFQs either by themselves or in consortium with experienced global LNG shipping firms.

However, industry sources said that these entities are expected to join the successful bidder after Petronet announces the ship owner and operator at the end of the bidding process.

(This article was published in the Business Line print edition dated March 7, 2006)
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