Swan Energy, Mitsui OSK partner for India's first LNG FSRU Port Project worth Rs.6, 000Cr

ANI | Updated: Sep 23, 2017 09:01 IST

New Delhi [India], Sept 23 (ANI-NewsVoir): Swan Energy Limited (Swan) is developing India's first Floating Storage and Regasification Unit (FSRU) based LNG Port Project.

The Project comprises of development of LNG Port facilities utilizing FSRU for LNG receipt, storage, regasification and send-out, with a regasification capacity of 5 MMTPA of LNG, off the Jafrabad coast in Amreli district in Gujarat ("the Project").

LNG Port will be operational in the last quarter of 2019 with FSRU. The total project outlay with FSRU and Port Project is approximately Rs. 6000 crores with an initial LNG capacity of 5 MMTPA.

Mitsui O.S.K. Lines Ltd. (MOL), of Japan, a world's leading shipping company and LNG carrier operators has decided to participate this project as equity and technical partner. MOL will play vital role during development and operational phase of the project MOL, MOL being well experienced in LNG business chain will give valuable contribution to the project.

A special purpose vehicle company namely Swan LNG Limited Private Limited (SLPL) was incorporated by Swan for implementation of the Project. State Government of Gujarat decided to invest 26percent equity in SLPL (15percent by Gujarat Maritime Board and 11 percent by Gujarat State Petronet Limited).

MOL being well experienced in LNG business chain will give valuable contribution to the project. MOL's board has given approval to participate with 11 percent equity in Swan LNG and will also be a Technical Partner for the project development.

Out of total 5 MMTPA capacity of first LNG Terminal, Swan has booked 4.5 MMTPA and has executed Regasification Agreements for reserving 1 MMTPA capacity with Indian Oil Corporation Limited (IOCL), 1 MMTPA capacity with Bharat Petroleum Corporation Limited (BPCL), 1 MMTPA capacity with ONGC and 1.5 MMTPA capacity with Gujarat State Petroleum Company (GSPC) on dated June 23, 2016.

MOL being well experienced in LNG business chain will give valuable contribution to the project during development of LNG Port, FSRU Construction and operation of LNG Terminals. To provide best operational flexibility and efficiency services to LNG Port users, Swan LNG also decided to have additional Floating Storage Unit (FSU) of 135,000 m3 along with the FSRU. MOL executed a long term Bareboat Lease Agreement to provide FSU with Swan LNG.

MOL and Swan LNG have executed agreements for the long-term Operation & Maintenance (O&M) for FSRU and FSU that will serve as the core receiving, storage and regasification facilities in an LNG terminal to be developed by Swan LNG.

MOL has also signed agreement for Pre-order Technical Specifications and Construction Supervision for new build FSRU which Triumph Offshore Private Limited (TOPL), another wholly owned subsidiary of Swan, has ordered to Hyundai Heavy Industries, Ltd. (South Korea).

Swan has ordered India's first newbuild FSRU to world's best shipyard M/s. Hyundai Heavy Industries (HHI) of South Korea. A Shipbuilding Contract for the FSRU building at South Korea has been executed between HHI and Triumph Offshore Private Limited (100 percent subsidiary of Swan) in August 2017. The total cost of new build FSRU to TOPL will be approx. Rs. 1800 cr.

The FSRU being built for Swan at Hyundai's shipyard in Ulsan will have a storage capacity of 180,000 cubic meters of LNG and is scheduled for delivery in November 2019. The FSRU will have capacity to regasify more than 5 MMTPA LNG.

Mitsui OSK Lines which has been awarded a long-term contract for operation and maintenance services aims to buy at least a 26 percent stake in the project to boost its exposure in the west coast project of Swan Energy.

"We have until end-2019, by when the project will be completed, to buy at least 26 percent in Triumph Offshore. Now it is a very good time for India to expand its LNG business. LNG prices are very attractive. Mitsui OSK Lines will sign a deal by early next month to take an 11 percent stake in Swan LNG, reducing Swan Energy's stake to 63 percent," said Takeshi Hashimoto, Senior Managing Executive Officer- Mitsui.

"Mitsui will pay about USD 13 million for the 11 percent stake in Swan LNG. Swan LNG will be taking bank loans to fund 80 percent of the 39 billion rupee (USD 608 million) facilities, with the remainder coming from stakeholders in proportion to their holdings. The new facilities chime with India's push to increase the proportion of gas in its energy mix, looking to the cheaper fuel to power its economic expansion. We aim to double our LNG regasification capacity after two year of commissioning the first FSRU, and may add another FSRU to meet India's rising gas demand," said Nikhil Merchant, Managing Director, Swan Energy Limited.

A pre order technical support agreement was signed by and between TOPL and MOL. A supervision agreement was signed by and among SLPL, TOPL and MOL. An FSU Bareboat Charter Agreement was signed by and between SLPL and MOL. The announcement was made after market hours yesterday, September 18, 2017.

FSRUs are floating liquefied natural gas (LNG) regasifiers that are easier, faster and cheaper to set up than onshore plants.

Mitsui OSK Lines is a well established and experienced shipping company, specialised in the operation of LNG carriers (LNG), floating storage units (FSU) and floating storage re-gasification units (FSRU).

Swan Energy Limited is an India-based holding company. The company is engaged in the manufacturing of textile products. The company's business segments include Textiles and Property Development/Others. The Company is engaged in the manufacturing and marketing of cotton and polyester textile products. (ANI-NewsVoir)

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