Gail eyes gas shipping; may buy 6-7 vessels

Last Updated: Sun, Jan 13, 2013 09:34 hrs

State-run Gail has said it is looking at foraying into the gas shipping segment, primarily to bring in gas from its Sabine Pass fields in the US as also for shipping in gas from Gazprom's Shtokman project in the Arctic region.

"We are planning to make a foray into the liquefied natural gas shipping business, mainly for importing gas contracted in the US," Gail Chairman and Managing Director B C Tripathi said after announcing the commissioning of the Dabhol LNG terminal over the weekend here.

Tripathi also said towards this, the company is planning to either take six-seven vessels on long-term charter hire or outright purchase.

"We will finalise a decision on this in the next three to four months," Tripathi said.

Gail in December 2011 had signed a pact to source LNG from the Sabine Pass project's fourth train in the US' Louisiana state for 20 years, beginning 2016-end or early 2017.

The agreement involves sourcing 3.5 mt gas from these fields annually. The field is slated to begin commercial production by late 2016 or in the beginning of 2017.

"The Sabine Pass LNG deal is on FoB (free on board) basis, and we need to ship the gas on our own," Tripathi said. Apart from this, Gail also has a long-term agreement to source 2.5 mt LNG from Gazprom's Shtokman project in the Arctic region, which will begin supplies from 2018-19.

"A team has been visiting various shipyards around the world to check availability before ordering new LNG vessels," Tripathi said, adding each of such vessels could cost Rs 700-800 crore.

Gail has roped in a global consultant to finalise the entry strategy in the liquefied natural gas shipping business. However, he did not name the consultant.

When done, it will be a major diversification for the state-owned gas supplier that is primarily into gas transportation and marketing.

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