GAIL issues tenders for LNG vessels

State-run gas utility GAIL India Ltd has issued a tender to hire nine ships to transport liquefied natural gas (LNG) from the US.
GAIL wants to hire newly built ships to transport up to 5.8 million tonnes per annum of LNG it had contracted in the US, beginning 2007. Bids are due by October 30, according to the tender document.
"The present bid is calling for 9 LNG vessels in lots of three vessels each, of a cargo capacity of not less than 150,000 cubic meters and not more than 180,000 cubic meters," it said.
The bidders will be required to quote for lots of three vessels, with a provision that under each lot, one of the ships shall be built in Indian shipyard. The bidder can quote either for one, two or all three lots.

Of the first two lots, GAIL said it wants delivery of the four LNG ships from overseas shipyards "within the eight months window starting from August 1, 2017 and ending on March 31, 2018."
The remaining two vessels from Indian shipyards will be delivered within six years of award of contract.

The two ships from overseas shipyards in the third lot will be delivered between February 1, 2018 and September 30, 2018. The third vessel from the Indian shipyard would be delivered within six years of award.
In December 2011, GAIL signed LNG sales and purchase agreement with Cheniere Energy Partners to lift 3.5 million tonnes per annum of LNG from the Sabine Pass terminal in Louisiana and last April its affiliate Gail Global LNG entered into terminal service agreement with Dominion Cove Point LNG to use its facilities for 2.3 million tonnes a year.

GAIL expects the deliveries to start in the third quarter of 2017 and the deals are to run for 20 years, extendable for 10 years in the former and 5 years in the latter case.
When state-owned firm first talked about hiring ships for ferrying LNG from the US to India, the previous Oil Secretary Vivek Rae saw the chunky contract as an opportunity to push the case for domestic LNG shipbuilding and pushed the company to include Indian shipbuilders, who currently don't have the technology, in the tender.
After Rae, the current Oil Secretary Saurabh Chandra nudged GAIL to reserve a part of the USD 7.6 billion contract for Indian shippers so that global majors transfer LNG shipbuilding technology to India.

Initially, GAIL resisted, saying it will be a time consuming process, but when the Ministry mulled issuing a Presidential directive, it backed down.
For past 6-7 months, GAIL had been resisting the inclusion of domestic ship-makers in the tender on grounds that Indian shipyards would need at least six years and huge finances to develop the capability to build cryogenic LNG carriers.
The Ministry was of the view that GAIL should promote domestic industry and mulled issuing a Presidential directive - an order in the name of the President who is the owner of public sector companies.