Reuters: Shipping law may hit Shell's LNG plan: “The Indian unit of Royal Dutch/Shell plans to commission its liquefied natural gas (LNG) terminal next month but is concerned Indian shipping rules may hurt its operations, government and company officials said” (ShellNews.net) 17 March 05

Thu Mar 17, 2005

By Himangshu Watts

NEW DELHI (Reuters) - The Indian unit of Royal Dutch/Shell plans to commission its liquefied natural gas (LNG) terminal next month but is concerned Indian shipping rules may hurt its operations, government and company officials said.

Shell is setting up a terminal which can handle five million tonnes of LNG a year at Hazira in western India. Initially, it will import 2.5 million tonnes a year.

The company is concerned about guidelines issued last year that say only ships bearing the Indian flag can bring LNG to the country.

Petroleum Minister Mani Shankar told parliament on Thursday the government was considering Shell's plea that the guidelines could hurt their project.

"Shell Hazira Gas Pvt Ltd ... have submitted that the stipulation requiring the use of Indian flag LNG ships for the import of LNG could adversely impact on the commissioning and commercial operations of the Hazira LNG terminal," Aiyar said.

"The matter is under examination."

A company spokesman said Shell was discussing the issue with the government.

"There are no Indian-flagged LNG carriers available today. Any requirement mandating the use of such vessels to import LNG can potentially impact the commissioning and operation of the Hazira project," he said.

"Shell has been involved in global LNG shipping for over 40 years, and there are no similar restrictions in any other country."

India, which imports 70 percent of its crude oil requirement and produces only half the gas it consumes, started importing LNG from Qatar last year and signed an agreement in January to import LNG from Iran starting 2009.

Petronet LNG, which imports LNG from Qatar, plans to double LNG sales to 5 million tonnes in the year to March 2005, and plans to build another terminal to import 2.5 million tonnes a year by 2008/09.

http://www.reuters.com/newsArticle.jhtml?storyID=7932840&type=businessNews 

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