Shanghai-based Wison Offshore & Marine Ltd., a subsidiary of the Wison Group, announced today the signature of an agreement in principle to supply a newbuild floating LNG regasification unit (FRU) to VGS Group of New Jersey, USA, for installation offshore India.

The FRU, which will be owned by VGS Group, will consist of a non-propelled barge equipped to perform the regasification of approximately 3.5 MTA of LNG supplied from trading tankers and will subsequently import the gas via pipeline into the Indian market. The facility will be moored offshore Andhra Pradesh on India's eastern coast, at the Kakinada Anchorage Port (KAP) and positioned alongside a VGS Group-owned 125,000m3 floating storage unit (FSU) that will be used as the receiving terminal for the trading tankers.

The FRU will be sized to allow for the expansion of the regasification capability to 7 MTA within the next few years to meet the rapidly growing natural gas requirements in Andhra Pradesh and the adjoining state of Orissa. As this region is presently in the midst of a widening natural gas deficit, the VGS Group KAP LNG Project is expected to allow for thousands of added MW's of power generation capacity to be made available in Andhra Pradesh, unfettering the state's power-starved commercial and industrial base.

Under the agreement, which is subject to final contractual resolution between the parties, Wison Offshore & Marine will be responsible for the design and engineering of the unit from its Shanghai operational center with construction to be performed at Wison's wholly-owned fabrication facility located in Nantong, China.

VGS Group has partnered with IL&FS, one of India's largest infrastructure developers, to develop the project. Under this arrangement, IL&FS and VGS Group will jointly own the project's offshore and onshore pipeline and VGS Group will own and operate the FRU and FSU and supply the gas under an existing agreement to Lanco Kandopalli Power Limited (LKPL) for use at LKPL's Andhra Pradesh based 1,475 MW combined cycle plant, as well as to other future gas buyers in the market.

"With the achievement of this milestone agreement with Wison, one of the world's premier shipbuilders, the critical juncture of the Kakinada LNG Project has been successfully reached," said Gaurav Tiwari, President of VGS Group. "This fast-track project marks India's first floating LNG import project, and which is projected to be the first operational East Coast India LNG regasification terminal, will serve as an energy gateway into Andhra Pradesh, providing the final element this great state requires to accelerate its economic growth and provide prosperity for its people."

"We are extremely pleased to move forward with VGS on this project and look forward to delivering the facility to help India meet its ever-expanding gas supply needs," added Wison Offshore & Marine Executive Vice President L. Dwayne Breaux. "This agreement marks Wison's second LNG–related project this year and provides our group another opportunity to expand our track record in this field."