$700-m Petronet LNG vessel deal goes to Mitsui-SCI consortium

,The Financial Express, December 25, 2005


Mumbai/New Delhi
Petronet LNG Ltd (PLL) has awarded the $700 million time chartering contract for an LNG vessel to the Mitsui-led consortium of Shipping Corporation of India (SCI), NYK and SK Lines. This 25-year contract is for carrying 2.5 million tonne per annum (mtpa) of LNG from RasGas of Qatar to PLL?s LNG re-gasification terminal at Dahej in Gujarat.
Bids for the contract were opened on December 24 where the Mitsui-led consortium emerged as the lowest bidder, outbidding the Exmar Marine led consortium of Varun Shipping and another consortium of Teekay Shipping and GE Shipping. The award of contract has also been approved by the PLL board, chairman and managing director of PLL, P Dasgupta told the FE.

When contacted, the CMD, SCI, S Hajara said, ?We have received a letter of acceptance for the same.? The Mitsui OSK-SCI consortia will have to deploy one LNG vessel as part of the transportation contract. The LNG vessel can carry about 62,000 tonne of LNG and it takes around nine days for a return trip from Qatar to India. In a year, the LNG ship would make nearly 35 round trips, Mr Dasgupta said.

PLL has already chartered two LNG vessels for carrying 5 mtpa of LNG from Qatar to Dahej. The company has recently decided to expand the capacity of its Dahej LNG terminal to 10 mtpa and has tied up imports of another 2.5 mtpa LNG from RasGas, from the Q1 of 2009. It is for this 2.5 mtpa tranche of LNG that it has awarded the LNG contract to the Mitsui-SCI consortia.

LNG vessel prices have dropped from around $240 million for a 1,38,000 M3 size in 1995 to around $150 million in 2003, but optimum occupancy in shipyards has seen prices go up to $205 million. There are currently 190 vessels contracted for ship building in various shipyards worldwide and a large number of LNG vessels are likely to come out of their long term contract between 2007 and 2011, changing the dynamics of the LNG trade.