GasLog and Mitsui bid for GAIL tanker contract

Vol 19, PW 15 (07 Apr 16) Midstream & Downstream
     

As expected GasLog and Mitsui are the only two lead bidders in GAIL's tender to hire nine or possibly 11 LNG tankers amid continuing uncertainty over how they will finance and build the complex multi-million dollar vessels in India.

By the extended March 31 deadline, GAIL received bids from just two consortia: one led by Mitsui OSK Lines with Nippon Yusen Kabushiki Kaisha (NYK Line) and Mitsui & Co as partners; the other led by GasLog with Mitsubishi Corporation, UK-based Foresight Oil and Kawasaki Kisen Kaisha (K Line) as partners. One of the bidders tells us it is vital the government offers 'soft' loans to both consortia for GAIL to meet its target that at least three of the tankers are built in India in line with Narendra Modi's 'Make in India' policy.

Cochin Shipyard is the only Indian yard eligible to build LNG tankers in India forcing both consortia to consider an alliance. And yet a source says the cost of building a tanker at Cochin could be as much as $365m while South Korean yards can do the job for just $215m.

This is the first time an Indian yard will be building a tanker raising serious doubts about Cochin's technical competence. As a result, he says, banks will be reluctant to finance Indian-built tankers.