GAIL can lock-in attractive LNG tanker rates

Vol 20, PW 19 (15 Jun 17) Midstream & Downstream

GAIL can expect attractive freight rates in its tender to hire tankers to transport LNG from Cheniere Energy's Sabine Pass liquefaction facility in the US to India or possibly other destinations from January 2018.

Unconfirmed reports say Shipping Corporation of India (SCI) which is managing the tender process for GAIL received around 10 offers by the May 12 deadline. "I am sorry I can't share the names of bidders," says a SCI source, apologetically.

"But what I can say is the response was good and we are evaluating the bids and negotiating terms and conditions. This is likely to take two or three weeks." Industry sources however tell us likely bidders could include the likes of NYK, Golar LNG, Mitsui OSK Lines, Teekay Shipping, GasLog, Hoegh LNG and Exmar, but this could not be independently confirmed.

GAIL has not specified how many tankers it wants to hire but SCI tells us this is normal practice. GAIL does however state it wants tankers of between 150,000-180,000 cubic metre capacity for a firm three-year plus optional one-year extension.

In an online video report on March 8 this year (2017) Teekay said average spot LNG tanker hire rates hover between $40,000-$50,000/day. "Demand (for term contracts) is soft," we hear.

"So rates are low." Analysts blame a global over-supply of vessels for driving down long-term tanker hire rates.