Refiners, SCI tap Korean giants for local shipyard

Indian Oil, Bharat Petroleum and Hindustan Petroleum are part of the discussions

- Subhash Narayan & Rituraj Baruah

The Shipping Corp. of India (SCI), along with public sector oil refiners, are in talks with three large South Korean shipyards to set up a shipbuilding facility in India, three people aware of the discussions said.

Indian Oil Corp. Ltd, Bharat Petroleum Corp. Ltd and Hindustan Petroleum Corp. Ltd are part of the discussions with South Korea's HD Hyundai, Samsung Heavy Industries and Hanwha Ocean, the people said on the condition of anonymity, adding the new yard may come up in Andhra Pradesh. In September, the four state-run companies, which plan to acquire dozens of crude and gas carriers over the next decade, had decided to form a joint venture to procure such vessels.

“Along with the consideration to procure vessels produced by these shipmakers, SCI and oil companies would join a shipbuilding entity, possibly through a joint venture as equity partners and remain dedicated buyers for ships being made in India,” one of the three people said, adding this would provide assured demand for the yard and make investments financially viable earlier. Depending on the size and scale of the shipyard, investment can range widely between ₹1,500 crore and ₹15,000 crore.

Currently, Indian refiners charter foreign vessels for their requirements. However, an indigenous fleet is expected to provide support during times of turmoil, like the vessel scarcity that boosted freight rates in 2022. As India is one of the largest importers of energy, both crude and natural gas, supply chain issues may lead to a major impact on the economy and energy security.