SCI eyes stake in Swan Energy’s Jafrabad LNG port project

      09/26/2018

Shipping Corporation of India Ltd (SCI) is weighing a plan to buy stake in a 10 million tonnes (mt) a year capacity floating storage and regasification unit (FSRU)-based new LNG port being constructed by Swan LNG Private Ltd off the Jafrabad coast in Gujarat’s Amreli district with an investment of 4,000 crore, a least two officials at the Mumbai-based firm said.

“We are evaluating a proposal to invest in the Jafrabad LNG port project,” a director level official at the company said, asking not to be named.

Japan’s Mitsui O.S.K Lines Ltd, the long-standing partner of state-run SCI in four LNG tankers leased to Petronet LNG Ltd, has a 11 per cent stake in Swan LNG Pvt Ltd.Swan Energy Ltd, a textiles and real estate group, has a 63 per cent stake in Swan LNG Pvt Ltd.

MOL is one of world’s largest LNG carrier operators and Japan’s only FSRU owner and operator.

The project involves building LNG port facilities utilising a new build FSRU along with a floating storage unit (FSU) for receiving, storing and regasifying LNG with an initial capacity of 5 mt. The FSRU and FSU will be leased on a long-term bare boat charter basis and connected by ship-to-ship transfer equipment.

The 180,000 cubic metre storage capacity FSRU serving the project is being constructed at South Korea’s Hyundai Heavy Industries Co Ltd. It will be owned by Swan Energy through its subsidiary Triumph Offshore Pvt Ltd and MOL has an option to participate in the FSRU joint ownership. The FSU will have a capacity of as much as 145,000 cubic metres.

Besides, MOL will participate in many facets of the project—billed India’s first new building FSRU project—as technical partner including operation and maintenance of the FSRU and FSU. The terminal is slated to start operation in early 2020.

FSRUs are drawing attention as a solution for flexibility and mobility in the LNG supply chain.

In October 2017, Swan Energy Pvt Ltd was awarded the rights by the Gujarat government to develop and operate the LNG port for an initial period of thirty years which can be extended by another 20 years.

By participating in the Jafrabad LNG project, SCI is looking to strengthen its presence in the LNG shipping business. It is the only Indian shipping company with experience in LNG transportation. The company, in partnership with Japan’s Mitsui O.S.K Lines, NYK Line and K Line, has leased four LNG tankers to Petronet LNG Ltd to transport LNG to its facilities located at Dahej in Gujarat and Kochi in Kerals.

It holds a 29.08 per cent stake each in two LNG ships and a 26 per cent stake each in the other two LNG carriers. It is also the technical and commercial manager of two of the four LNG ships.“We are definitely going to manage that project (the FSRU and FSU). We are the only ones in India capable of doing that. We are open to picking up a stake in the Jafrabad LNG port project,” the SCI official mentioned earlier said without giving details on the quantum of stake and the investment.