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Investors and Players not Happy with New LNG Shipping Policy
In a recent statement by Indian Prime Minister, Manmohan Singh announced a review of the LNG Shipping policy. Many in the shipping industry are upset because Dr Singh did not discuss the issue with industry players.
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The current LNG shipping policy restricts LNG import only on Indian flag vessels those Indian companies having a minimum of 27% ownership of the carrier. The companies importing LNG will be allowed to import on spot basis on vessels other than Indian flag vessels. This is subject to condition that the cargo on these spot vessels be limited to 11% of the total amount of LNG import during the year.
There is debate in the shipping circles about the LNG shipping policy expecting to allow wider choice of carrier. The restriction in the current LNG shipping policy is on the foreign companies and any reform is likely to incur the anger of domestic shipping companies.
The prevailing LNG guidelines were framed on the basis of the global practices then prevalent and with an aim to meet Indias energy requirements. The guidelines made way for participation by foreign companies, equity contribution by domestic companies followed by transfer of technology over a period of time.
Indian shipping companies demand certain reservation so that banks are willing to finance them for acquiring ships. Without this the companies will not be in a position to compete with the much financially stable foreign companies.
In their latest market research report, Indian Oil & Gas Industry: An Industry Analysis RNCOS experts explain that a change in policy will be only sufficient for foreign shipping giants like Royal Dutch/ Shell to overpower the Indian market, for they may import LNG using their own carriers.
The report views the growth prospects and future conditions in the industry where the costly LNG ships will require investments of about Rs.960 crore.
It provides an objective analysis of the Oil & Gas sector in India. It gives detailed information on exploration, production, and other processes accompanied with annual consumption figures.
The report gives a detail overview of the opportunities and challenges and important success factors for the growth of the shipping industry.
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