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GAIL asked to use Indian ships for importing LNG from US

Gail will require at least five ship to bring about 5.8 million tonnes of gas every year from the US.

Updated: Jan 07, 2014, 08.58 AM IST
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Gail will require at least five ship to bring about 5.8 million tonnes of gas every year from the US.
Gail will require at least five ship to bring about 5.8 million tonnes of gas every year from the US.
NEW DELHI: The government has directed state-run Gail India to use Indian ships for importing gas worth $2.5 billion annually from the US, a model that is practiced by Chinese oil firms to encourage domestic shipping industry.

India’s biggest gas utility Gail will require at least five ship to bring about 5.8 million tonnes of gas every year from the US starting September 2017 and there is a strong possibility of involving Indian shipyards in building liquefied natural gas (LNG) carriers, government and industry officials said.

However, Gail is reluctant to take any risk because of huge exposure in the deal. Any delay in delivery of ship would force the company to pay billions of dollar liabilities to the seller in the US as well as gas buyers back home, oil ministry and company officials said. Gail declined comments.

“We are in talks with Gail and the shipping industry to resolve issues such as technology and delivery on time. India is poised to import LNG in huge quantities. This is an opportunity to boost our shipping sector,” an oil ministry official said.

Earlier, addressing an industry meeting Petroleum Secretary Vivek Rae also said India should have capacity to build LNG tankers.

“We are going to witness quantum jump in LNG import and cannot afford to depend on foreign suppliers. Indian ship builders need to grab this opportunity as the country will not only need large carriers but also smaller tankers suitable for smaller ports. We better learn to build LNG tankers at an early stage or we will always be dependent on foreign suppliers,” he had said.

Gail wants to sign charter agreements with companies supplying LNG carriers by September this year to meet the delivery deadline, company executives said. “Seeing the distance between India and the US, which will entail a return voyage time of around 50 days, the carriers should be technically sound. Domestic firms must be asked to tie up with experienced foreign ship builders to meet Gail’s requirement,” a company executive said.

LNG tankers require sophisticated technology as natural gas is stored below -162 degree Celsius to keep it in liquid state. The liquefaction shrinks storage space by 600 times compared to the gaseous state. Shipyards of South Korea lead the market for LNG tanker building while Japan and China are catching up fast.

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