GAIL extends bidding deadline for $7 billion LNG carriers

After postponing the deadline thrice, GAIL had in Feb scrapped the tender to hire 9 LNG carriers to ferry gas from the US, with a caveat that three of them be Made in India

State gas utility GAIL India has extended last date of bidding for its USD 7 billion tender for hiring nine newly built ships for ferrying LNG from the US by over two months to allow Indian shipyards to tie up technology for building the specialised vessels.

Bids for charter hiring of nine ships quoted in three lots of three ships each were due last week but have now been extended till February 29, 2016, official sources said.

One ship in each lot is to be built at an Indian shipyard.

The extension in the bid date has been done to accomodate request of Indian shipyards for allowing them time to tie up technology for building the specialised cryogenic carriers.

After postponing the deadline thrice, GAIL had in February scrapped the tender to hire nine LNG carriers to ferry gas from the US, with a caveat that three of them be Made in India. At that time no foreign shipyard was willing to share LNG shipbuilding technology.

Negotiations that followed saw Korean shipbuilders Samsung Heavy Industries, Hyundai Heavy Industries, Daewoo Shipbuilding & Marine Engineering agreeing to cooperate with Cochin Shipyard, L&T Shipbuilding and Pipapav Shipyard respectively.

L&T Shipbuilding has however walked out of the tender citing its preoccupation with defence projects.

Yesterday, Cochin Shipyard signed an agreement with French technology company Gaztransport & Technigaz (GTT). GTT, which holds patented technology for LNG ships, will give designs, engineering and supervision for building of the cryogenic carriers as also performance guarantee for the ship.

Sources said while two ships will be built at the shipyards of their foreign collaborators, one carrier has to be built in India. Other Indian shipyards are looking at similar tie-up for the same.

GAIL had on September 15 re-floated the tender for charter hiring of nine ships.

The tender document provides for Indian shipyard taking 5 per cent to 13 per cent in the liquefied natural gas (LNG) carrier that it will build. This condition was not there in the original tender floated last year.

Also, GAIL has a right to take up to 10 per cent equity stake in any or all of the nine ships. Shipping Corporation of India (SCI), which is to operate the carriers, will have a right to 26 per cent interest, according to the document.

GAIL and SCI had last year signed an agreement wherein the state-owned shipping company has the step-in right to take at least a 26 per cent stake in each of the nine LNG carriers hired by GAIL.

GAIL plans to time charter, or hire, the carriers for 18 years from fleet owners. Overseas shipyards have been given time till May 31, 2019 to deliver their ships while those built at Indian shipyards are to be delivered between July 1, 2022 and June 30, 2023, the tender document said.

GAIL has tied up 5.8 million tons per annum of LNG from the US which the newly built ships will ferry.