Shell, govt tiff over LNG shipment

The government today said companies wanting to import liquefied natural gas (LNG) will have to use Indian-flagged vessels - a stipulation which may further delay commissioning of Royal Dutch/Shell's Hazira terminal in Gujarat.

"All imports will have to be only on Indian flag vessels. There is no change in this stance, and all companies, including Shell, should comply with this," shipping minister T R Baalu said today.

"LNG shipping is an important business and we want to promote Indian companies. I would ask all firms, including Shell, to use Indian-flagged vessels for import of LNG," Baalu added.

Shell wants to employ its own vessels to transport LNG, and the ministry's decision may delay the commissioning of its 2.5 million tonne per annum import terminal at Hazira. The commissioning was scheduled for last month.

A Shell official said the company intends to commission the project this month, but it could be delayed if the shipping ministry continues to deny it the "right" to haul LNG  on foreign-flagged vessels.

The ministry recently issued a directive saying all India-bound LNG ships should be either entirely Indian-owned or should have at least 26% Indian ownership. Shell has argued it is entitled to ship LNG on its own or any foreign flag as per the original understanding with the government.