India will soon be a poster child for floating LNG terminals
Some years back few would have thought of setting up offshore floating LNG
storage and liquefaction facilities. But not anymore. In an interview with
Neeraj Dhankher, Teekay Gas Services’ President, Captain David Glendinning talks
of how the concept of a floating storage and regasification unit is fast
catching up among LNG players across the globe. More so in India where LNG
business prospects are on the boil and the situation calls for innovative and
quicker solutions to crack the LNG business code. Excerpts:
LNG has the potential to become the most important business segment in the
oil and gas sector in India today. How do you perceive its growth in
LNG will continue to grow throughout the world not just because there is
plenty of it but also because it is relatively cheap, easily transportable and
environment friendly. On the flip side, we are not sure on what’s happening on
the shale gas front. It is good for LNG markets when it is exported from the US,
but not when it is developed in China, India or Argentina for instance. But I
think these sources of shale gas may take some time to develop. In India, the
demand for gas is growing by the day due to rapid urbanization and government
policies promoting use of gas for producing energy. This can be met only through
import of LNG.
What business opportunities can India offer on the LNG front?
In India we are keen to follow an inclusive approach where we share our
expertise, transfer knowledge and use as much Indian content as possible. We are
prepared to create joint ventures and use Indian resources. We have similar
approach in place for Indonesia, Angola, Yemen and Qatar where we shared our
expertise. We are happy and excited to be in India as it suits our approach of
working through collaborative joint ventures and allows transfer of knowledge
and expertise. We will ensure that we provide value to the country and not just
India welcomes outside expertise and we welcome bringing
expertise into the country and sharing it. Both these strategies
marry nicely. It is give and take, a win win situation through
collaboration. It is a comfortable place for us to be in.
Today there are two LNG terminals in the country and many more are to come.
Then there are also other quicker market solutions like floating storage and
regasification units (FSRUs). This concept is cheaper, faster to implement, more
flexible and does not involve any land acquisitions as required by shorebased
terminals. This cost effective solution means that the resultant savings can be
passed down the LNG value chain to end consumers.
India has a long coastline and both the East and West coast offers immense
opportunities for installing FSRUs. What is most interesting is that different
types of projects have different needs to which we can cater. For instance, we
also have expertise in ship to ship transfer which may be required in some
locations. Our competencies as well as prior experience in harsh weather FPSOs
can be extended to some projects that are being considered at offshore locations
in India. It is important to add that we have made a strong commitment in India
to provide solutions to the LNG industry and we will endeavor to utilize Indian
competence and resources.
Are you in talks with any company in India for setting up FSRUs?
We are talking to a number of players in India on exploring the possibility
of setting up FSRUs. In fact, we are looking at a number of FSRU possibilities
in India. During Vibrant Gujarat summit recently, we signed an MoU with Swan
Energy to develop a 5-mmtpa FSRU in the state. We are also in talks with other
LNG players such as GAIL, Petronet LNG Ltd and many more for setting up FSRUs.
With our corporate set up and LNG partners, we can raise equity as and when
required. Realistically speaking, two to three of these contracts may
materialize this year itself. So we are committed to India already and it seems
natural to develop business here.
We have recently ordered two LNG carriers which will use advanced M-type
electronically controlled gas injection twin engine which we hope to charter out
Will you also look to venture into setting up LNG infrastructure in India?
Being a marine company, we are interested in being a part of an integrated
LNG facility specializing in the provision of the FSRU where our competency
lies. We are not looking to get into LNG trading or laying pipelines outside the
Singapore is setting up a 6-mmtpa LNG terminal to trade LNG. Do you think
this will alter transportation requirements of Indian companies sourcing LNG?
We expect the terminal to cater to requirement of spot LNG mostly. Players
who need gas more than contracted may use this facility. To them, this gas may
turn out to be readily available to meet the demand. But I do not think that
this will have any major impact on long-term LNG contracts.
Are you exploring opportunities for setting FSRUs elsewhere in the Indian
We have been approached by Sri Lanka for looking at FSRU opportunities.
However, we are not looking at either Bangladesh or Pakistan as of now. India is
a better opportunity for us and we prefer to focus our efforts here. In fact, we
have an India strategy which we kicked off 18 months ago for gas opportunities.
What prompted formulation of a specific strategy for India?
India welcomes outside expertise and we welcome bringing expertise into the
country and sharing it. Both these strategies marry nicely. It is give and take
here, a win-win situation through collaboration. It is a comfortable place for
us to be in. India has become more accessible as the government is attracting
foreign investment which is making it easy for foreign investors.
How much of an investment is the company looking at in India?
Today Teekay Gas Partner has the ability to fund substantial annual growth.
Bearing this in mind each project will be evaluated on its meritsand necessary
capital will be made available as required.
Please throw light on the entire range of business operations being
undertaken by Teekay Shipping Corporation.
The company was founded in 1973 but it took some time to grow. It was in
1980s that Teekay Shipping became a major player in the Aframax sector which
involved shipping crude oil across the Pacific from Indonesia to west coast of
United States and transporting fuel oil back to West Asia. This trade was
created on the back of a number of time chartered Aframax tankers. In 1985 we
decided to venture into direct purchase of second-hand ships as the quality of
ships required was not readily available for time charter. In 1988, we ventured
into a new building program in the Aframax sector.
In 1995 Teekay Shipping was floated on the New York Stock Exchange. This was
a period of consolidation and recovery after the downturn in the Aframax sector
in early 1990s. By 1998, the company was on a stable platform.
We realised early that we needed competent and efficient
officers. Today India is our single largest supplier of officers
accounting for 25% of our total officer strength.
In 1998 we embarked on a growth and diversification strategy under the
leadership of our CEO, Bjorn Moller. As strategy of diversification, first we
acquired three tankers of Caltex Australia and set up an operational hub in
Australia. Simultaneously we diversified in to the offshore market placing FSO
(floating storage and off take) on long term contract on west coast of
In the Aframax sector, we expanded our business in the Atlantic by acquiring
Bona Shipping Norway which had a dominant position in that market.
As a natural extension of our competencies, we entered the shuttle tanker
market through the acquisition of a controlling stake in the largest publicly
traded shuttle tanker operator – Ugland Nordic Shipping of Norway. We then
acquired Statoil’s wholly-owned shipping company, Navion ASA., Norway, which
gave us access to majority of shuttle tankers operating in the North Sea. We
further expanded in LNG sector by acquiring Naveria F.Tapais AS.
We extended our competency further into developing Floating Production
Storage and Offloading (FPSO) units through our acquisition of Petrojarl in
Norway. Today, we have 11 FPSOs, to go with a new building which has been
engineered in New Delhi by an Indian contingent and another one in Brazil.
The diversification strategy has allowed us to thrive in a market that others
are struggling to survive in. We are in a very strong position to continue
growing as others are taking cover. The strategy has paid off in the long term.
When did you set up base in India?
We have had a presence in India since 1988. We realized very early as we grew
our fleet that we needed well educated, competent and efficient officers. No
longer were they available in Europe to a great extent. Initially we worked
through a manning agency and on acquisition of Bona Shipping we established our
own office which takes care of our manning and business development. Today,
India is our single largest supplier of officers accounting for 25 per cent of
our total officer strength.
How did Teekay evolve into an LNG transporting company?
Having become a prominent player in the Aframax and Suezmax sector in the
Pacific and the Atlantic as well as in the shuttle tanker market, our aim was to
become the world’s leading supplier of energy transportation. This led us to
LNG. In 2003 we decided to enter the LNG space with a two pronged approach. We
acquired four LNG ships from Spain’s largest provider of marine energy
transportation, Naviera F. Tapias S.A. At the same time we were successful in
tendering for three ships for a RasGas project in Qatar. Having invested a total
of 4 billion dollars today we have 29 LNG ships, including 50
per cent ownership in a FSRU and two ship new building order, making us the 3rd
largest independent operator in LNG ships in the world.
How did you arrange funds for implementing the growth and diversification
In order to fund our growth ambitions our parent Teekay Corporation created
three daughter companies namely Teekay LNG Partners L. P, Teekay Offshore
Partners L.P, Teekay Tankers Ltd, all of which are listed on the New York Stock
Exchange. The creation of this facility has allowed us to grow competitively as
equity can be raised to support our ventures.