Shipping Corp In Jv Talks With British Gas, Shell

The Shipping Corporation of India (SCI) is planning to enter into joint ventures with global energy majors British Gas and Shell.

The proposed joint ventures are for setting up a shipping company which will transport liquefied natural gas (LNG).

"We have already made it clear to both British Gas and Shell that we are interested in joining hands with them. British Gas and Shell have evinced interest in equity participation by us. They have, however, not given us any firm commitment. Talks are still going on," said K M Joseph, director, SCI.

SCI has identified LNG transportation as a thrust area as this is regarded as the sunrise segment of the industry. LNG transportation contracts are typically for around 15-20 years which insulate the company from the vagaries of the freight market.

SCI has also decided to enter into two separate joint ventures for transporting LNG to the Dahej and Kochi terminals being set up by Petronet LNG.

It's joint venture with Mitsui OSK Line of Japan and Enron for transporting LNG to the Dabhol power project is under a cloud following the US-based energy major's decision to exit the Dabhol Power Company.

Shell is planning to set up a five-million tonne LNG terminal at Hazira in Gujarat. It has already obtained the requisite environmental clearances for the project from the ministry of environment and forests.

It has also placed orders for two LNG carriers with Mitsubishi Heavy Industries of Japan which will transport LNG from the Gulf. SCI is negotiating to pick up a stake in the company which will be formed for owning and operating these ships.

The race for setting up LNG terminals is hotting up with British Gas, too, planning to set up one at Pipavav in Gujarat. This project also has been conceived with a capacity of 10 million tonne.

Initially, the project size will be only 2.65 million tonne. British Gas is planning to invest around $550 million in the project.

Recently, it bought out its joint partner Seaking Engineers' 48 per cent stake at reportedly Rs 375 crore. British Gas is now planning to go it alone in the LNG terminal project after efforts to rope in the National Thermal Power Corporation failed. The first phase of the project is expected to be operational by 2005 and financial closure is expected to be achieved in 2002.