India's Bold Move: Teaming Up with Korea for Massive Oil & LNG Ship Building Drive!

Author

Aditi Singh | Whalesbook News Team

Detailed Coverage:

India is strategically looking to South Korea, a global leader in shipbuilding, to build its fleet of oil tankers and Liquefied Natural Gas (LNG) carriers. This initiative is a key part of India's broader objective to reduce its reliance on foreign vessels for transporting crude oil and natural gas, which currently sees only about 20% of the $150 billion annual cargo carried by Indian-owned or flagged ships.

Union Minister for Petroleum and Natural Gas, Hardeep Singh Puri, has been actively engaging with top Korean shipbuilders, including HD Hyundai Heavy Industries and Hanwa Ocean. He emphasized the significant investment opportunities available in India's rapidly expanding energy infrastructure and shipping industry.

A significant development is the planned formation of a joint venture (JV) that will include the Shipping Corporation of India (SCI) and major state oil marketing companies such as Indian Oil Corporation Ltd, Bharat Petroleum Corporation Ltd, and Hindustan Petroleum Corporation Ltd. SCI will be the lead shareholder with a 50% equity stake, while the oil companies will hold 40%, with the remaining 10% coming from a government maritime development fund.

This JV intends to procure around 59 vessels over the next few years, with tenders expected to be floated soon. The company will also explore acquiring secondhand vessels. A long-term commitment from oil companies for chartering these ships is anticipated, with rates linked to market indexes.

Impact This collaboration is poised to enhance India's indigenous shipbuilding capacity, foster technological advancement, create employment, and significantly bolster the nation's energy security and economic self-reliance. It could also lead to substantial business for Indian shipyards and ancillary industries. Impact Rating: 8/10

Difficult Terms LNG Carriers: Specialized ships designed to transport Liquefied Natural Gas, which is natural gas cooled to a liquid state for easier transport. Foreign-flagged Vessels: Ships registered in a country different from the country of ownership or operation, often due to regulatory or cost benefits. PSU Companies: Public Sector Undertaking companies, which are government-owned enterprises. Joint Venture (JV): A business arrangement where two or more companies pool resources to undertake a specific project or activity.