GAIL to Set Aside $7.5 Bn for Hiring LNG Ships

GAIL (India) is expected to set aside estimated $7.57 billion for hiring a fleet of sophisticated LNG ships to ferry gas from the US to India for 20 years from 2017, reports Indian newspaper Financial Express.

The state owned energy firm has contracted to import 5.8 million tonnes per annum (mtpa) of LNG imports from the US starting 2017.

“It’s been decided to charter ‘new build’ ships to transport gas from the US. Step-in right (to GAIL) in the ownership of LNG ships would only be possible for new build ships. Since fuel and other charges are to the charterer's account, GAIL is looking at chartering fuel-efficient ships,” an official told Financial Express.

The company is also considering picking up equity stakes of up to 10%.

According to the newspaper, there is also a plan to partner Shipping Corporation of India in the venture with the option of the state-run entity taking up stakes (up to 26%) in the ships.

The ministry of petroleum and natural gas, the sources told Financial Express, had suggested to GAIL to consider awarding one-third of the contracts to Indian ship makers. However, this is unlikely to materialise as Indian shipyards don’t have any track record of building large ships.