Varun plans to build LNG carriers

India?s fourth largest private sector shipowner, Varun Shipping Co, plans to raise $536 million in an effort to expand business, mostly in the carriage of liquefied natural gas.

Varun, a leading player in the transport of liquefied petroleum gas, will sell securities either in the domestic market or abroad to raise the money, it said in a statement to the Bombay Stock Exchange.

The company sees its future in the carriage of LNG, and needs to raise funds to acquire the requisite tonnage. India is emerging as a major importer of LNG and it has been estimated that, by 2012, the country’s imports will almost equal Japan’s current LNG imports of 60m tonnes per annum. To transport this amount of gas will require about 25 LNG carriers by the year 2012 and 34 by 2025.

Japan transported about 43% of its total LNG import of 60 mtpa in 2003 on Japanese owned and controlled ships. Similarly, South Korea transported about 61% of its LNG imports of 19.3 mtpa during that period on Korean controlled ships. In the combined import of Japan and Korea, the participation of third-party owned ships was a mere 8.3%.

Most of the top shipowners, including the state-owned Shipping Corp of India, Great Eastern Shipping and Varun Shipping, are keen to get into the field with minimal delay and Varun has considerably ramped up its presence in the field of its niche market, LPG carriage. It has recently completed a Rs10bn ship acquisition programme and added eight vessels to its fleet during 2005, including five 1991-built and one 1990-constructed ‘J’ class gas carriers, purchased from Maersk Sealand at a total cost of $160m.