Cochin Shipyard finds the going tough on LNG front

The Cochin Shipyard may well be punching above its weight if it gets the orders to build LNG (liquefied natural gas) carries in India.

The task, however, is ‘tough’ as a senior CSL official put it, given the reluctance on the part of global LNG carrier building leaders it is in talks with to fritter away the ‘monopoly’ they have in the field. “They could be thinking why they should collaborate with us and squander their monopoly. So while we have been in talks with Korean and Japanese firms, global leaders in LNG carrier construction, the talks haven’t made any headway,” he said.

With the Gas Authority of India Ltd (GAIL) deciding to acquire nine LNG carriers, with a condition that three should be built within India on a partnerships basis, the CSL began discussions primarily with Korean firms Daewoo Shipbuilding and Marine Engineering Co, Samsung Heavy Industries and Hyundai Heavy Industries for absorption of technology. It also mooted plans to build a larger drydock — with an overall length of 300 metres, with the first 135 metres having a width of 100 metres and the remaining 165 metres having a reduced width of 65 metres — which is big enough for construction of LNG carriers. The Union Shipping Ministry threw its weight behind the whole programme earlier this month and plan is afoot to build the new dock over a four-year period.

The glitch, however, is in getting a technology leader in the field to firm up an agreement for transfer of the niche technology to the yard. “The Japanese firms do not appear to be too keen, as their hands are full. Industry pundits say Japan would require at least 90 LNG carriers over the next 10 years to meet its own needs,” said an official.

“Estimates show at least $220 million would be the building cost of one LNG carrying vessel. If they are to build it in India, it would be costlier still, as a chunk of it is equipment and material cost.”

Besides, the order on the Indian yard collaborating in the effort would have to be placed by the global firm selected to build the first six. “So, they need to have confidence in the Indian yard, too. It is going to be a game-changer and the aggressive approach of the CSL in pressing ahead with its LNG carrier construction plans is liked by these firms.”