No one interested in LNG tanker show at GAIL

Vol 19, PW 8 (17 Dec 15) Midstream & Downstream

No one seems interested in GAIL’s re-issued tender to hire nine or possibly 11 new LNG tankers to import US gas for up to 20 years from 2019.

How else to explain GAIL’s decision on December 8 to extend the bid deadline from December 14 to February 29, 2016? "This clearly reflects poor interest," says a likely bidder. He adds the tender is "complex" with GAIL's continued insistence that at least three tankers are built in India.

Worse, GAIL is unwilling to share risk for Indian-built tankers insisting tanker owners bear all risk, even though Indian yards have no experience. "Each tanker is likely to cost around $220m," says a potential bidder.

"To expect the owner to bear all risk with inexperienced Indian yards is unfair. Because of this I don't think any consortium has actually been finalised.

" Only tentative partnerships have been forged so far: Samsung Heavy Industries with Cochin Shipyard and Daewoo Shipbuilding with Pipavav Defence. Another unfavourable condition set by GAIL, and criticised by potential bidders, is that foreign shipyards must take 10% equity in each foreign-built tanker.

"Why will any foreign yard invest around $20m in each tanker?" we hear. "They may do it on paper but they will recover this money by building it into the cost of the tanker.

" Asked to respond, GAIL declined to comment.

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