GAIL prunes shopping list for LNG ships as gas prices fall
New Delhi:State-run gas utility GAIL is looking at pruning its n early $7 billion shopping list for 11 LNG ships due to changed market dynamics in the wake of sharp fall in global gas prices, industry sources said.
The company may also have to extend the tender for the vessels to address several concerns raised by prospective bidders with a view to ensuring wider participation. The tender is scheduled to close on Monday. The sources said GAIL has indicated to prospective bidders that it may not need all the 11ships in the changed circumstances. With gas prices falling, the economics of ferrying the entire contracted 3.5 million tonne per annum of gas from the US to the Indian market may not work out.
Swapping part of the contracted v olumes with other countries or selling in alternative markets could be more attractive. With shipping rates down to $30,000 per day , it may not make economic sense to tie up longterm charters that would be more expensive. Instead, i t would suit the company to split its charter portfolio between long-term, mid-term and spot charters as supplies from the two US projects are to start in January 2018.
The reduction in the number of ships, the sources said, could alter the calculation for bidders who would be working out their price in the assumption of at least nine vessels.