Japan's Mitsui OSK targets 26 pct stake in Swan's Indian LNG unit

Swan

18/09/2017 17:23

* 5 mln T/yr LNG project to start operation by Q1 2020 
    * Mitsui to pay $13 mln for 11 pct stake in Swan LNG 
    * Korea's Hyundai Heavy industries to build the FSRU 
 
    By Promit Mukherjee and Nidhi Verma 
    MUMBAI/NEW DELHI, Sept 18 (Reuters) - Japan's leading 
shipper Mitsui OSK Lines  9104.T  aims to buy at least a 26 
percent stake in a floating storage regassification unit (FSRU) 
in India, a company official said, to boost its exposure in the 
west coast project of Swan Energy  SWAN.NS . 
    Swan Energy is building a 5 million tonnes a year FSRU and 
floating storage unit (FSU) at Jafrabad in western Gujarat 
state, with Mitsui awarded a long-term contract for operation 
and maintenance services. 
    "We have until end-2019, by when the project will be 
completed, to buy at least 26 percent in Triumph Offshore," 
Senior Managing Executive Officer Takeshi told Reuters on 
Monday, referring to the Swan subsidiary that will control the 
$260 million FSRU. 
    Swan aims to commission the project in the first quarter of 
2020, he added. 
    Another Swan Energy unit, Swan LNG Private Ltd, will manage 
the terminal and port facilities at the project. 
    Hashimoto said that Mitsui 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. 
    Two Gujarat state companies hold a combined 26 percent of  
Swan LNG. 
    Swan will charter the FSU from Mitsui OSK and has mandated 
Korea's Hyundai Heavy Industries  009540.KS  to build the FSRU. 
    FSRUs are floating liquefied natural gas (LNG) regassifiers 
that are easier, faster and cheaper to set up than onshore 
plants. 
    P. Sugavanam, director at Swan Energy, said Mitsui will pay 
about $13 million for the 11 percent stake in Swan LNG. 
     He said that Swan LNG will be taking bank loans to fund 80 
percent of the 39 billion rupee ($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. 
    "Now it is a very very good time for India to expand its LNG 
business. LNG prices are very attractive," said Hashimoto. 
    Swan could double its LNG regassification capacity after two 
year of commissioning the first FSRU, Sugavanam said, adding 
that the company can add another FSRU to meet India's rising gas 
demand.  
    Indian Oil Corp  IOC.NS , Bharat Petroleum Corp  BPCL.NS , 
Gujarat State Petroleum Corp (GSPC) and Oil and Natural Gas Corp 
 ONGC.NS  have agreed to lease the full capacity of Swan's 
terminal. 
($1 = 64.1300 Indian rupees) 
 
 (Editing by David Goodman) 
 ((nidhi.verma@thomsonreuters.com; +91 11 49548031; Reuters 
Messaging: nidhi.verma.thomsonreuters.com@reuters.net)) 
 
Keywords: INDIA JAPAN/MITSUI