South Korean companies opt out of Petronet LNG transportation race

Three South Korean shipping lines�Hanjin Shipping, Samsung, and Hyundai Merchant Marine Co.�have opted out of the race in they were considered strong contenders to bag a liquefied natural gas transportation deal from the Indian government-owned Petronet LNG Ltd.


MUMBAI�Three South Korean shipping lines�Hanjin Shipping, Samsung, and Hyundai Merchant Marine Co.�have opted out of the race to bag a liquefied natural gas transportation deal from the Indian government-owned Petronet LNG Ltd..

The three were considered top contenders among several companies that expressed interest in the lucrative 25-year secured contract to transport a total of 7.5 million tonnes/year of LNG purchased from Ras Laffan LNG Co. of Qatar (RasGas). Of that, 5 million tonnes would go to the Petronet LNG terminal at Dahej in Gujarat, and 2.5 million tonnes to the terminal at Kochi in Kerala. Bids for the deal were generally issued from joint ventures of Indian and foreign companies.

A combination of severe tender terms and conditions, a perception of high risk, and anticipated trouble in arranging finances for building the required two LNG carriers compelled the SK Shipping-Samsung combine to stay away from submitting the price bids.

�It is unfortunate that we have had to drop out after coming such a long way in the bidding process,� said a Samsung official, who refused to be identified in print. �But we had started feeling very uncomfortable with the tender conditions, which led us to consider the project to be a highly risky proposition.

�However, we will now be discussing with the remaining bidders the possibility of some kind of tie-up for the construction of the two required LNG tankers of 138,000 cu m capacity each, at our shipyard in Korea.�

Hyundai Merchant Marine Co. decided not to invest in the LNG shipping deal because of the strained financial position of the company, which has led to a restructuring of its business activities.

It is also reliably learnt that Hanjin Shipping, which had signed a memorandum of understanding with Varun Shipping, plans not to send in a bid by the official closing date of Nov. 15. The South Korean major had been a frontrunner in the contest.

The decision of the South Koreans to back out leaves their Indian partners with scant time to scramble around for alternative foreign shipping partners in under a fortnight before the bids close.

The five consortia now left in the fray are the Mitsui OSK Lines Ltd.-K Line-NYK Line combine of Japan, Exmar Shipping Co. of Belgium, Malaysia International Shipping Corp. (MISC) of Malaysia, Leif Hoegh with Foresight Ltd. of the UK, and Osprey Maritime with Al Manhal of Abu Dhabi.

Of these, MISC has entered the fray in partnership with Essar Shipping, while the three-member Japanese consortium has joined hands with the state-owned Shipping Corp. of India.

Great Eastern Shipping recently backed out of its tie-up with SK Shipping and Samsung; and hitched its wagon onto Exmar Shipping.

Varun Shipping, whose deal with Hanjin has now fallen through, will have to take its pick between Leif Hoegh-Foresight and Osprey Maritime-Al Manhal.

More in LNG