GAIL extends tender for hiring LNG carriers till 29 February

State-run gas utility Gas Authority of India Ltd (GAIL) has postponed the deadline for a tender for hiring LNG carriers by over two months to 29 February 2016, a move that will allow Indian shipyards to tie up technology for building specialised vessels.

This is the fourth time that GAIL is scrapping a tender to invite fresh bids for hiring LNG vessels to transport natural gas from the US to India.

Earlier in February, Gail scrapped the tender to hire nine LNG carriers to ferry gas from the US, with a caveat that three of them be made in India.

The decision comes close on the heels of state-run Cochin Shipyard Limited (CSL) acquiring the necessary technology for building LNG carriers (See: Cochin Shipyard secures licence to make LNG ships).

CSL has successfully completed a Mark-III Flex Mock-Up, which has been certified by GTT (Gaztransport et Technigaz), France, thereby completing all requirements to be licensed by GTT to build LNG ships for any client world-wide using their patented membrane containment system known as the Mark-III Technology.

CSL has become the first Indian shipyard to obtain this coveted license from GTT, making it eligible to take part in the tender floated by GAIL for LNG carriers.

GAIL was forced to postpone tenders for LNG carriers as no foreign shipyard was willing to share LNG shipbuilding technology with Indian shipbuilders.

GAIL India has now extended last date of bidding for its $7-billion (Rs 46,417 crore) tender for hiring nine newly built ships for ferrying LNG from the US by over two months.

Bids for charter-hiring of nine ships quoted in three lots of three ships each were due last week, which also have now been extended till 29 February 2016, official sources said.

One ship in each lot is to be built at an Indian shipyard. The extension in the bid date has been done to accommodate request of Indian shipyards for allowing them time to tie up technology for building the specialised cryogenic carriers.

Negotiations that followed saw Korean shipbuilders Samsung Heavy Industries, Hyundai Heavy Industries, Daewoo Shipbuilding & Marine Engineering agreeing to cooperate with Cochin Shipyard, L&T Shipbuilding and Pipapav Shipyard respectively.

L&T Shipbuilding, however, walked out of the tender citing preoccupation with defence projects.

On Monday, Cochin Shipyard signed an agreement with French technology company Gaztransport & Technigaz (GTT). GTT, which holds patented technology for LNG ships, will give designs, engineering and supervision for building of the cryogenic carriers as also performance guarantee for the ship.

Sources said while two ships will be built at the shipyards of their foreign collaborators, one carrier has to be built in India. Other Indian shipyards are looking at similar tie-up for the same.

GAIL had on September 15 re-floated the tender for charter hiring of nine ships.

The tender document provides for Indian shipyard taking 5 to 13 per cent in the liquefied natural gas (LNG) carrier that it will build. This condition was not there in the original tender floated last year.

GAIL also has a right to take up to 10 per cent equity stake in any or all of the nine ships. Shipping Corporation of India (SCI), which is to operate the carriers, will have a right to 26 per cent interest, according to the document.

GAIL and SCI had last year signed an agreement wherein the state-owned shipping company has the step-in right to take at least a 26 per cent stake in each of the nine LNG carriers hired by GAIL.

GAIL plans to time charter, or hire, the carriers for 18 years from fleet owners. Overseas shipyards have been given time till May 31, 2019 to deliver their ships while those built at Indian shipyards are to be delivered between July 1, 2022 and June 30, 2023, the tender document said.

GAIL has tied up 5.8 million tonnes per annum of LNG from the US which the newly built ships will ferry.