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  • AUGUST 10, 2000

LNG shipping – Set for a take off!

The Indian shipping companies are foraying into the Liquefied Natural Gas (LNG) transportation in a big way. With multinationals setting up power other and LNG based projects in India, the demand for LNG is expected to go up sharply since LNG is one of the key inputs used for power generation.

Petronet LNG, which proposes to have two terminals at Dahej and Kochi, would require four LNG vessels for moving 7.5 metric tonnes of LNG annually. Three Indian shipping lines, that have already tied up with the foreign consortia, bidding for the LNG movement for Petronet LNG. This includes Shipping Corporation of India (SCI) and Matsui-OSK of Japan, Great Eastern Shipping (GESCO) with SK Shipping of Korea and Varun shipping with Han Jin of Korea.

Meanwhile, Greenfield Shipping, a joint venture between SCI, Mitsui-OSK and Enron has bagged the order for the Enron’s Dabhol project to transport 2 million tonnes of LNG annually from the Persian Gulf. Compared to the world LNG carrier capacity of 8.8 m gross registered tonnage (grt), the Indian grt is disappointing and this is expected to change in the coming years.

World Merchant Fleet as on FY99 LPG Carrier LNG Carrier
World Fleet    
Number of ships 957 108
GRT (m) 8.4 8.8
Age 15 14
Indian Fleet    
Number of ships 11 -
GRT (m) 0.15 -
Age 13 -

The LNG traffic projections are estimated at 53 m tonnes by FY2020 as per the Vision-2020 report on the Indian port sector. As the demand is expected to go up, many companies have already placed orders for new LNG carriers to expand their LNG handling capacities. Shell International Gas Limited, for example, has already placed an order with Mitsubishi Heavy Industries Ltd. for the construction of two LNG carriers of 135,000 cmc each. Shipping Corporation of India’s Laxmi, the 137,100 cubic million tonne LNG carrier, would be delivered by FY02 (estimated cost US $ 189 m).

As the freight rates are moving up as demand continues to exceed supply, in terms of shipping capacities, realisations are expected to improve. With domestic consumption of LNG in India expected to go up (currently around 21 million tonnes per annum), LNG transportation is set to take off in a big way.

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