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Thursday, October 27, 2016

India to Build Own LNG Fleet

October 17, 2005

Despite some delays, the Indian shipping industry appears to be finally gearing up to develop an LNG (liquefied natural gas) fleet. With India emerging as a major importer of the gas, even the Ministry of Shipping has asked Indian ship-owners in no uncertain terms to take the initiative to develop an LNG fleet, according to a report on -

It is estimated that by 2012 India's LNG imports will almost equal Japan's current LNG imports of 60 million tons per annum. And to transport this quantity, the country will need about 25 LNG vessels by 2012 and 34 by 2025. Indian ship-owners are realizing the need to build up an LNG fleet. "Japan transported about 43 perent of its total LNG import of 59.1 million tonnes in 2003 on Japanese owned and controlled ships. Similarly, Korea transported about 61 per cent of its LNG imports of 19.3 million tonnes during that period on Korean controlled ships. In the combined import of Japan and Korea, third party owned ships participation was only 8.3 per cent," points out the Indian National Shipowners Association (INSA) President, Mr Yudhishthir Khatau, according to the published report.

Understandably, this kind of LNG fleet development will mean significant value addition to the economy. According to a recent study by TERI, on an average, the value added by the shipping industry to the economy per unit of Gross Registered Tonnage (GRT) acquired is Rs 2,211.

This would mean that if India acquires an LNG fleet of 25 vessels by 2012 there would be a value addition to the economy of Rs 519.60 crore (assuming that one LNG ship is 1,38,000 or 94,000 GRT). Similarly, an LNG fleet of 34 ships would mean a value addition of Rs 704.6 crore to the economy.

The development of an Indian-flagged LNG fleet can also have a multiplier effect on the country's tonnage. It has been estimated that the total profit of a typical three-year-old LNG vessel at the current pricing structure for the remaining 27 years (assuming a vessel's economic life is 30 years) will be in the region of $281.3 million.

(Source: The Hindu Business Line -

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