From THE HINDU group of publications
Thursday, December 13, 2001


Greenfield to go for `step-up' charter rate with Oman

P. Manoj

NEW DELHI, Dec. 12

GREENFIELD Shipping Company has decided to opt for the step-up charter rate system with Oman Government for deploying its 1,37,000 cubic metre capacity tanker LNG Laxmi build originally for the troubled Enron-promoted Dabhol Power Company (DPC).

For the first five years of the time charter agreement set to be signed between Greenfield and the new charterer Oman Government, the time charter hire rate would be below $ 70,000 per day.

Between the fifth and tenth year, the time charter rates will go up to a little over $ 80,000 per day. Beyond the 10th year, there will be another charter rate.

In fact, the rates being firmed up for this period will be as good as the rates which was agreed upon for the DPC shipping contract at $ 98,600 per day, sources involved in the exercise said.

While the promoters of Greenfield took delivery of the LNG tanker on November 15, the original charterer DPC has defaulted on chartering the vessel due to the on-going controversy surrounding the power plant.

Of the three original promoters, SCI is still in the fray with a 20 per cent stake. Enron-affiliate Atlantic Commercial Inc has sold its 20 per cent equity to Oman Government, which also picked up another 20 per cent from Mitsui O.S.K. Lines share of 60 per cent. The Oman Government and Mitsui now have 40 per cent equity each in the LNG shipping venture.

The Oman Government has sub-chartered LNG Laxmi to its 51 per cent subsidiary Oman LNG which will deploy the tanker to transport LNG cargo to Europe and South Korea on spot basis.

Oman LNG had entered into a 20-year sale purchase agreement in 1998 with DPC to sell 1.6 million tonnes per annum of gas to Dabhol with the first shipment due in November.

With Dabhol embroiled in a controversy, the LNG meant for Enrons LNG facility is being sold to customers in Europe, particularly Spains Anagas and South Koreas Kogas, the sources said.

LNG Laxmi will soon sail for Spain from Oman with the first lot of gas sold by Oman LNG in the spot market, sources said.

Oman LNG is also understood to be negotiating for a long-term sale purchase agreement with the Spanish-Government owned Anagas for supplying LNG.

With LNG Laxmi facing possible unemployment due to the Dabhol imbroglio, the Oman Government seized the opportunity to acquire a substantial stake in LNG shipping venture with the idea of promoting Oman shipping into LNG trade.

The swift move by Oman Government warded off an attempt by Shell, the operating company for Oman LNG, from selling a second-hand LNG vessel to Oman LNG.

Oman has its own aspirations in LNG shipping and its Government wanted its shipping industry to gain a foot-hold in the LNG shipping sector and train its own crew in this area, sources said.

Allowing Shell to charter its second-hand vessel to Oman LNG would have precluded the possibility of an involvement by a Oman shipping company in LNG trade, the sources said.

Oman Government stepped in and concluded the new charter agreement with Greenfield without involving Oman LNG in the whole exercise, the sources said.

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