GAIL to obtain Indian ships

GAIL plans to involve Indian companies in its $7.5-billion, 20-year LNG importing plan.

GAIL (India) Ltd, the largest stateowned natural gas processing and distribution company, plans to buy ships made by domestic shipbuilders for transporting gas from the USA. This would prove beneficial to domestic companies such as L&T and Pipavav.

GAIL (India) would have to incur a massive cost of $7.6 billion for hiring the required specialised vessels. According to reports, the company has agreed to issue a tender for charter hiring of nine newly build LNG ships in three lots of three ships each. In each lot, one ship will be built in Indian shipyard. While foreign companies will have to deliver ships in three years, domestic shipbuilder will get an extended time of up to six years.

GAIL (India) has recently become Asia’s first company to sign a long-term LNG sale and purchase agreement with Cheniere Energy Partners; LP (Cheniere) to procure 3.5 million tonnes per annum of LNG from the latter’s Sabine Pass Terminal in Louisiana, USA for a period of 20 years.

At present, USA gas is available to only those countries with which it has a free trade agreement (FTA), of which India is not a part. However, it is expected that the USA would agree to sell LNG to India by exempting it from the requirement of a compulsory FTA when the Prime Minister Narendra Modi, visits Washington DC in September. Though two projects in the USA, where GAIL (India) has a stake, have been given special permission for future sourcing, India would prefer a complete waiver from the existing conditions.