NEW PLAYER HEATS UP FIGHT FOR LNG SHIPS

NEW PLAYER HEATS UP FIGHT FOR LNG SHIPS

There's a new player in the liquefied natural gas vessel purchase game, and it's upped the ante dramatically to $80 million each for the three specialized tankers the Maritime Administration wants to sell.

Other potential buyers have offered $12 million to $15 million each for the vessels.The sale of the subsidy-built ships has been stalled by complex administrative deliberations over compliance with U.S. citizenship requirements and a Cabot LNG Corp., Boston, lawsuit in U.S. district court seeking to block the proposed sale to subsidiaries of Argent Group Ltd., New York.

But it is another LNG operator, Energy Transportation Group, New York, that has added a new dimension to the case with its interest in the LNG vessels.

That interest apparently is intense, because Kimball C. Chen, vice president and director of Energy Transportation, has told Marad his company is ''ready, willing and able" to bid "in the range" of $80 million a vessel.

The offer will get the attention of Marad, Cabot and Argent, because a Marad sale agreement with Argent Marine I, II and III - companies created to buy and then lease the three vessels to Shell International, London - has a price of $12 million each. The vessels are the Arzew, Gamma and Southern.

Cabot contends the sale to Argent should be set aside because of an ''illegally flawed" bidding process and because Argent is not a qualified U.S. citizen. In 1988, it offered terms of $15 million each for the LNG ships.

None of the parties had an immediate comment on the Energy Transportation offer.

Marad faces a crucial March 5 deadline for a decision on whether the Argent companies qualify to buy the vessels under shipping law citizenship requirements.

In October 1988, the agency determined the Argent companies were U.S. citizens but subsequently began a review of its decision after learning of 1988 business relationship agreements between Argent and Shell.

Once the Marad review is complete, Cabot's court challenge will resume. Both Cabot and Energy Transportation hope the court eventually will order Marad to re-open the sale on the LNG vessels.

In court documents obtained by The Journal of Commerce, Mr. Chen explained that Energy Transportation wants to buy the vessels because its fleet of eight LNG tankers "are now committed on long-term contracts, or time charters (and) it has no excess capacity to effectively compete for new contracts."

The company's ability to expand "depends on its ability to acquire, charter out and manage additional vessels," he continued. Constructing a new LNG vessel, which could cost $225 million to $250 million, would result in ''substantially higher end-costs" to U.S. consumers, said Mr. Chen.

He called the $12 million Argent offer "unreasonably low."

Samuel Rosenthal, attorney for Energy Transportation, said Wednesday the $80 million figure for the LNG vessels, which were built in the late 1970s, "is a fair assessment of the value of the vessels."

Recent settlement discussions between Argent and Cabot fell apart. An industry source, who asked not to be identified, said Marad had encouraged them to settle the lawsuit so that it could "avoid a decision" on the citizenship question.

The source indicated the settlement talks revolved around the possibility of permitting Cabot to purchase one LNG vessel, while Argent would buy the other two.

Bruce F. Kiely, an attorney for Cabot, confirmed there was an effort for a settlement but added: "It's not going to work out, and it's remote that settlement discussions will resume."

Stephen Gottlieb, managing director of the Argent Marine companies, said, ''I really can't comment on any settlement discussions. Marad is to make its decision (on the citizenship question), and we expect to prevail."