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Louis Dreyfus drops out of race for Petronet LNG shipping deal

P. Manoj

NEW DELHI, July 10

THE French company Louis Dreyfus, one of the top shipowners, charterers and trading houses, has dropped out of the race for the Petronet LNG shipping deal.

Louis Dreyfus decided not to participate in the bidding process for the LNG shipping contract after being short-listed by Petronet LNG as one of the nine foreign owners and operators.

Sources involved in the exercise told Business Line, that Louis Dreyfus failed to pick-up the bid documents which have been issued to the pre-qualified bidders since the middle of June at a cost of $ 10,000.

``The French company neither picked-up the provisional bid document which was issued initially nor did it exchange the provisional document with the final bid document which was issued by Petronet LNG to the short-listed bidders after getting it vetted b y legal consultant Ince & Co. of London'', the sources said.

The departure of Louis Dreyfus from the race leaves eight pre-qualified foreign owners and operators in the fray to bid for the shipping contract which involves transporting 7.5 million tonnes per annum of LNG purchased by Petronet LNG from Qatar's Rasga s on free-on-board (f.o.b.) basis for 25 years.

Petronet will time-charter three LNG tankers owned and operated by the successful bidder which will be a joint venture involving foreign and Indian shipping companies.

The short-listed foreign bidders include Mitsui OSK Line-K Line-NYK consortium of Japan, Hanjin Shipping Company, Samsun-S.K.Shipping Line, Hyundai (all from South Korea), Malaysian International Shipping Corporation, Osprey Maritime-Al-Manal combine (a US-United Arab Emirates venture), Exmar (Belgium) and Leif Hoegh-Foresight consortium.

Petronet LNG has convened a pre-bid meeting of the eight short-listed bidders in the last week of July wherein the prospective ship owners and operators will be allowed to give their suggestions to the bid documents.

The financial bid is expected to be invited from the short-listed bidders by September and the contract will be awarded by December, sources said.

After short-listing foreign ship owners and operators on the basis of their technical qualifications, the final bid document issued by Petronet LNG Ltd has stipulated a financial criteria involving a net worth of $ 100 millions and a turnover of $ 300 mi llions to stay in the race for the LNG shipping deal.

The stiff financial criteria stipulated by Petronet LNG had at least one foreign bidder from South Korea in trouble.

Petronet LNG Ltd has also stipulated a minimum net worth of Rs. 50 crores for Indian shipping companies to participate in the shipping deal as domestic joint venture partners with a minimum equity holding of 26 per cent.

In order to help smaller players in the domestic industry to participate in the deal, Petronet LNG has allowed the Indian shipping company falling short of the Rs. 50 crores net worth to forge a consortium with other domestic partners (both shipping and non-shipping) to make up the minimum net worth.

However, in such an event, a major portion of the Rs. 50 crores net worth should come from the shipping company, Petronet has stipulated in the final bid document.