Make in India: L&T, Hyundai Industries ink LNG carriers agreement

MUMBAI: Engineering major Larsen & Toubro has signed a technology transfer agreement with South Korea's Hyundai Heavy Industries to build carriers for liquefied natural gas (LNG) at its shipyard at Kattupalli, near Chennai.

While L&T aims to bag order from staterun GAIL which is likely to re-launch tender for nine LNG carriers with this tie-up, the company hopes to get more orders in India and abroad. GAIL had issued a Rs 42,370-tender to charter nine LNG carriers in August last year which was later scrapped due to dismal response.

"We have signed a memorandum of understanding with Hyundai, the world's largest shipyard, for know-how to manufacture LNG carriers for the GAIL tender. This will help bringing into India the complex technology involved," MV Kotwal, whole-time director & president (heavy engineering), told ET.

In August 2014, GAIL had floated a global tender to charter nine newly built ships for transportation of LNG from the US. The tender found no takers as it required bidders to build at least onethird of the ships in India, a condition that could not be fulfilled by any company.

While the Indian companies have not built LNG carriers before and did not qualify, International players who ere eligible to bid did not participate.

Samsung Heavy Industries has also signed a pact to build LNG carriers with Cochin Shipyard. Samsung was one of the four Korean shipyards that qualified for GAIL's tender requirements; others being Daewoo Ship Building and Marine Engineering, Hyundai Heavy Industries and STX Offshore and Shipbuilding.

L&T's Kotwal said that given India's energy needs and softening of LNG prices, he expects more order to come up. India's imports of LNG are set to almost double over the next five years, fuelled by sustained low LNG prices, rising industrial demand, and falling domestic gas production.

"India would be importing more LNG and there will be a significant future demand for more carriers. We will explore serving global requirements too," he said.

The tie-up with Hyundai will help L&T improve utilisation of its shipyard at Kattupalli, which is housed under subsidiary L&T Shipbuilding. L&T set up the Rs 4,700 crore shipyard-cum-port complex at Kattupalli to manufacture warships, large commercial vessels and to augment the existing capacity at Hazira for submarines. The company hopes to make it the next major international destination after Colombo and Singapore ship repairs in the region.