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GAIL Delays LNG Carrier Tender Once More

Samsung
File image courtesy SHI

Published Mar 2, 2016 9:27 PM by The Maritime Executive

Indian state-owned energy and chemicals conglomerate GAIL has once again delayed its tender for the time charter of nine newbuild liquified natural gas carriers, three of which must be built in India.

The extension - to the end of March – is the third in as many months, and follows multiple delays in a similar bidding process last year. PTI reports that GAIL postponed the latest deadline upon request from its bidders, to give them additional time to complete their proposals for the $7 billion tender.

The nine tankers are for transporting six million tons per annum of already-contracted gas from liquefaction facilities in the U.S.; GAIL is to begin taking delivery of the gas at the end of 2017. Bidders will be able to submit proposals for one or more of three lots of three ships, with each lot including one ship to be built in an Indian yard.

GAIL had to delay the conclusion of bidding several times last year due to the absence of a qualified domestic shipyard among the bidding partners. The situation has changed, however – Cochin Shipyard, a major contractor in the defense and government sector, has since acquired full certification from GTT to built LNG carriers. It is partnering with Samsung Heavy Industries to compete for the tender.

GAIL may not have many alternatives to select from by the time bidding concludes. Domestic competitor Pipavav Defense and Offshore Engineering is working with Daewoo Shipbuilding & Marine Engineering (DSME) of South Korea on a bid; L&T Shipbuilding, which had been expected to join with Hyundia in a proposal, has dropped out to focus on defense contracts.

The terms of the tender have not changed since February, but they do differ somewhat from last years' version. GAIL's contract now provides for a five to 13 percent stake in the vessels for the Indian yards, and GAIL itself will take ten percent. Shipping Corporation of India, their operator, may take 26 percent. GAIL will time charter the vessels from their owners on an 18 year term contract.