India’s plan to build LNG ships may not materialise
India, which is emerging as one of the largest importers of LNG, will require 25 to 30 more LNG ships to meet its gas import requirements.
The Ministry of Petroleum and Natural Gas’s high octane initiative to facilitate construction of highly specialised Liquefied Natural Gas (LNG) ships at Indian shipyards may prove to be a “non-starter,” mainly due to the “worsening” track record of Indian ship builders, according to sources in the know.
The Ministry of Shipping is also reportedly not as enthusiastic about the prospects of building these vessels as its sister Ministry of Petroleum.
India, which is emerging as one of the largest importers of LNG would require 25 to 30 more LNG ships in the coming few years to meet its gas import requirements and commitments. Petronet LNG Ltd last month asked Indian shipyards to be ready to cater to the country’s growing need for LNG vessels, however as of today, this seems to be a difficult aim to achieve.
LNG ships are amongst the most difficult vessels to construct and the average cost of each ship stands between a whopping $250–300 million. Only a few countries in the world such as South Korea, Japan and now China have developed expertise to develop these vessels, and this poses a big task at hand for Indian shipbuilders with struggling track records.
“The technology can be imported, but the big question is whether we can train the manpower to build such high-tech vessels,” says a government official requesting anonymity.
Most Indian shipyards currently do not even have capacity to successfully build conventional Very Large Crude Carriers ( VLCC). Companies such as Pipavav Shipyard and ABG Shipyard have previously been unable to deliver many of their projects of such scale on schedule, which has earned them a bad reputation in India and abroad.
India’s oldest Hindustan Shipyard is unable to at- tend to requirements of such ships since its takeover by the Ministry of Defence while the Cochin Shipyard is also occupied with a number of contracts by the Indian Navy. There is no Indian shipyard today which can be compared to those in South Korea or Japan to attend to the country’s LNG vessels need.
“This sudden enthusiasm by the Oil Ministry is a bit perplexing,” says a source close to the Ministry of Shipping.
“What needs to be done is to generate a national vision and route map for putting India amongst the global players making very specialised and high-tech vessels such as LNG carriers. This requires meticulous planning involving all the big stake holders such as the respective ministries and all the public and private exporters and importers of natural gas.”
With India set to import 45% of its total natural gas requirements by 2030, it should be setting up an eco-system and investment climate that would attract investment and foreign capital for building LNG vessels and related technologies with domestic collaborators. However, systems need to be in place first for this to be a successful reality. The current approach to such a large project is seen as naive at best by many industry experts.