Mitsui consortium wins Petronet's LNG contract

A consortium led by Mitsui OSK Lines along with the Shipping Corporation of India (SCI) and NYK Line has emerged as lowest bidder for the 25-year contract for ferrying liquefied natural gas (LNG) for Petronet LNG Ltd's Dahej project.

P Dasgupta, managing director and CEO, Petronet, confirmed the development, saying: "Teekay Shipping Corporation "� Great Eastern Shipping combine was the second lowest bidder, while Exmar team came as third lowest bidder for the carrying LNG from Qatar," Dasgupta said.

Dasgupta pointed out that there would be a 12-12.5 per cent reduction in the cost as there was no condition of LNG ship to be flagged in India. "This will benefit the company and the industry immensely," he pointed out. The cost of the LNG contract is estimated to be at Rs 3,200 crore.

Earlier, Petronet had shortlisted the consortium led by Belgium company Exmar Marine NV along with its partners Varun Shipping Company and IndianOil Corporation (IOC).

Petronet had quashed the earlier three bids as a fallout of the government's decision to keep the existing LNG guidelines, insisting LNG vessel to be flagged in India, in abeyance. The matter went to the court.

The Delhi High Court had also dismissed Exmar consortium's petition challenging Petronet's decision to call fresh bids for the contract for time chartering an LNG tanker.

According to sources, scrapping of Indian flag vessel condition will have a positive impact on operating and financing cost as the bidders will be able to flag the LNG tanker in a jurisdiction of their choice.

They pointed out that the contract size would also come down substantially as there would not be any impact of direct taxes since there is no involvement of Indian flag vessels.

At present, Director General of Shipping (DG Shipping) restricts LNG import only on an Indian flag vessel or Indian company holding a minimum of 26 per cent ownership of the ship and any relaxation in the guidelines would benefit companies like Royal DutchShell who want to bring fuel on their own ships.

SEALING THE DEAL

The consortium has has emerged as lowest bidder for the 25-year contract for ferrying liquefied natural gas (LNG) for Petronet LNG Ltd's Dahej project

The cost of the LNG contract is estimated to be at Rs 3,200 crore

There would be a 12-12.5 per cent reduction in the LNG cost as there was no condition of LNG ship to be flagged in India