LR Energy named preferred independent inspection agency by IHI Corporation

Close cooperation with IHI leads to partnership on expansion projects at Dahej and Mundra LNG terminals

Lloyd's Register Energy has been named as the preferred supplier for both third-party inspection and vendor site inspection by engineering, procurement and construction firm IHI Corporation for two new LNG tank projects in western India.

The nomination of Lloyd’s Register Energy comes after IHI won the EPC contracts for two tanks at the Dahej terminal and two at the Mundra terminal. When completed, the Mundra tanks will have a capacity of 160,000 m3. The Dahej terminal tanks will have a capacity of 170,000m3, making them the largest planned LNG storage tanks in the country.

The agreement recognises the importance of high-quality inspection and independent assessment, which reassures industry stakeholders and the public that IHI is using expert resources to ensure the safety of this project. IHI is a multi-engineering Japanese-owned corporation with more than 27,500 employees and net sales of 1,304 billion Yen / $12.9 billion USD (2013).

"It is a high profile association with IHI and the project is critical to the Indian energy industry,” says Pascal Coudeville, SVP of Lloyd’s Register Energy’s Inspection Services. “We have been working alongside IHI as a key partner for two years as they prepared their bid for these important projects. Lloyd’s Register Energy is one of a very few number of organisations that have the diversity of technical expertise to fully support clients across the energy supply chain, delivering that important role which connects inspection with operational safety issues and commercial acumen. We believe this agreement from IHI recognises that.”

As the preferred third-party inspection party, Lloyd’s Register Energy will conduct inspection and certification of all material, component and equipment that require regulatory approval. The company will also provide inspection services at the various global sites of component manufacture, in order to manage the quality of vendors. This vendor site inspection will ensure that the equipment is being made to IHI’s specifications.

Previously, Lloyd’s Register Energy worked with IHI on two LNG storage tank projects, four of which were at the Dahej LNG terminal, and two more at the Kochi LNG terminal in the state of Kerala.

India is one of the leading countries for imports of LNG. It is the fifth largest importer of LNG after Japan, South Korea, the United Kingdom and Spain and accounts for 5.5 percent of the total trade.
With increasing competition against China and Japan for LNG supplies, and its domestic gas output facing challenges such as overland delivery, the importance of managing risk around LNG tanks and terminals cannot be underestimated. Qatar supplies India on long-term contracts but India is eager to diversify its energy sources and is keen on buying LNG from Canada on long-term contracts to meet its vast growing energy needs. India has already secured deals to import about 14 million tons of LNG a year and is in discussion with suppliers for an additional 20 million tons per year.

However, the cost of the imported gas -- at least $10 million to $12 per million metric British thermal units (mmBtu) -- represents a challenge for India, as consumers are accustomed to government fixed prices of $4 million to $5 million mmBtu. The country’s long-term focus is to achieve energy independence by 2030.

"This latest move by Lloyd’s Register Energy working together with IHI as their nominated independent inspection agency is another step in India’s strategy to actively support the safe and sustainable development of LNG in India," said Coudeville. “It also signifies Lloyd’s Register Energy as a provider of high-quality worldwide inspection services.”

For more information, please contact jason.knights@lr.org.

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