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Petronet LNG shipping deal -- Gesco drops SK Shipping-Samsung, joins hands with Exmar

P. Manoj

NEW DELHI, Oct. 27

GREAT Eastern Shipping Company Ltd (Gesco) has parted ways with SK Shipping-Samsung Corporation of South Korea and has decided to take Exmar Shipping Company as its foreign consortium partner to bid for the Petronet LNG shipping deal.

Sources told Business Line that Gesco was in the process of changing its foreign partner. ``The arrangement with the new partner -- Exmar -- is definite and final. Gesco will bid for the deal with the Belgian-based company and not with SK Shipping-Samsun g Corporation combine'', they stated.

Gesco is making an aggressive bid to win the Petronet LNG Ltd shipping deal involving the transportation of five million tonnes per annum (mtpa) of LNG purchased from Qatar's RasGas for 25 years on free-on-board (f.o.b.) basis for the proposed regasifica tion terminal at Dahej in Gujarat.

While most of the other Indian contenders such as Essar and Varun have tied up with the respective foreign partners in their individual capacities, Gesco cemented its intentions by roping in Indian Oil Corporation (IOC), one of the promoters of Petronet, as its domestic consortium partner.

Petronet will time charter two LNG carriers of 1,38,000 cu. m capacity each from a joint venture ship owning and operating company comprising Indian and foreign partners.

Eight foreign shipping consortia are in the race to bag the contract and each of them are required to take on an Indian shipping company as their domestic joint venture partner as per the tender conditions.

Since the number of eligible Indian shipping companies are less than the shortlisted candidates on the foreign side, Petronet has allowed one domestic shipping company to bid with one or more foreign consortia.

Apparently, SK Shipping-Samsung Corporation did not like the idea of Gesco bidding with more than one foreign partner. ``SK Shipping-Samsung Corporation desired that its arrangement with Gesco-IOC should be an exclusive one'', the sources said. Besides, the two sides could not arrive at a common understanding on many terms of the joint venture agreement.

Gesco's arrangement with the South Korean consortium finally fell through recently after the Indian shipping company succeeded in its efforts to hold hands with Exmar. Incidentally, Exmar was also negotiating for a tie-up with Varun Shipping, which, howe ver, did not materialise.

With Gesco jettisoning them very near to the last date (November 15) for the submission of price bids for the contract, SK Shipping-Samsung Corporation will have to hunt for a suitable Indian partner to stay in the race for the LNG shipping deal.

Despite the break-up, Gesco is still open to the idea of bidding with SK Shipping-Samsung Corporation also. ``Gesco may eventually make it with them provided the South Korean consortium is amenable to the plan and its terms and come back to us'', the sou rces said.