Sci Scouting For Partners For Lng Transportation
The Shipping Corp-oration of India (SCI) is looking for an international partner to enter the transportation segment of liquefied natural gas. This is a prelude to the strategic alliance with Hindustan Petro-leum Corporation and Total S A of France for setting up an LNG terminal on the east coast.
P K Srivastava, chairman and managing director, SCI, said, We are in the process of identifying financial and technology partners for operating LNG vessels.'' Since LNG contracts include long term commitment, SCI intends entering into a joint venture with its foreign partner.
With more than 10 LNG terminal projects slated to come up in the country, SCI is positioning itself to take a bulk of the LNG transportation business.
Industry sources claim that SCI is gearing up for international competition in the LNG trade after the final draft of the shipping policy struck down any reservations favouring domestic shipping lines.
The policy has forced Indian liners to seek international partners as they have neither the ability to handle a specialised cargo like LNG nor the financial muscle to own LNG-carrying vessels. Sources claim that LNG trade requires a plethora of financial guarantees to cover the cargo. It also involves strict delivery schedules as there are huge penalties linked to it.
Further, each project should have dedicated LNG vessels. Each LNG vessel is estimated to cost anywhere between $300 million and $350 million.
Sources in the shipping industry indicate that SCI's foray into the LNG carrier business is important as international norms indicate that the country which imports LNG should have total control over the transport and flow of the fuel.
SCI has evinced interest in joining hands with HPCL-Total for the proposed integrated LNG project in Andhra Pradesh. Estimated to cost $1 billion, the LNG terminal is linked to a power plant for which the HPCL-Total combine has receive FIPB approval in February.
LNG for the proposed project will be imported from Total's reserves in the Middle East. Total is participating in four Middle East LNG projects. At Qatar, Total has 20 per cent equity in the upstream and 10 per cent in the liquefaction project.
In Oman, it enjoys 5.54 per cent equity in the reserves, in Abu Dhabi it has 8.7 per cent equity in the reserves, and in Yemen, Total is the lead operator with 36 per cent equity holding.
While LNG projects in Qatar and Abu Dhabi are operational, the field in Oman will commence production in the year 2000 while the project in Yemen is slated to produce gas in 2001.