General ship repairs, scrubber and BWMS retrofits, and LNG dual-fuel power conversions have all had to overcome the challenges posed by the current pandemic
A key impact of the lockdown in China has been the impossibility of dockyard workers returning to work from their New Year holidays. Clarkson Research Services (CRS) estimates that ship repair activity dropped by 20% in the period January to May 2020 compared to the last quarter of 2019. A number of special measures were put in place to cope with the fall in yard slot availability and the need for social distancing; class societies made allowances, including Special Survey deferrals ranging from three to six months, and in some cases conducted remote surveying to overcome travel restrictions.
CRS noted that a large part of shipyard activity in 2019 was attributable to scrubber retrofits, but this fell away with the fall in the price of marine fuel. The US$300 tonne differential between very low-sulphur fuel oil (VLSFO) and high-sulphur fuel oil (HSFO) moved to barely above US$60 tonne, chipping away any advantage charterers may have gained from fixing a tanker with a scrubber.
“Ship repair activity dropped by 20% in the period January to May 2020 compared to the last quarter of 2019”
According to CRS, in April and May 2020 around 270 ships left the repair yards and 150 arrived for scrubber retrofits. CRS estimates there are still another 700 vessels booked for scrubber installations, but it does not expect all to be completed in 2020, given the low crude oil price. This will also have an impact on tanker conversions; there are six conversions to FPSOs expected in 2020 – these may be delayed, warned CRS.
However, around 20,000 vessels are due for ballast water management retrofits over the next five years. This is likely to keep the yards occupied for some time.
N-KOM winning Middle East tanker retrofit work
One of those yards is Nakilat-Keppel Offshore & Marine (N-KOM), which was established in 2008 as a joint-venture between the world’s largest LNG fleet owner Nakilat and a global leader in offshore rig design, construction and repair, ship repair and conversion Keppel Offshore & Marine. The Erhama Bin Jaber Al Jalahma shipyard is currently operated by N-KOM, and boasts state-of-the-art facilities with three Q-Max-sized docks (two graving docks and one floating dock), berthing capacity of 3.15 km and cryogenic cleanrooms.
Since operations began, N-KOM has been one of the Middle East’s leading shipyards and has delivered in excess of 1,100 marine and offshore projects in a safe and timely manner to clients from around the world. N-KOM has also completed in excess of 230 gas carrier routine drydocking and repairs at its facility, including retrofits of specialised systems such as ballast water treatment systems (BWTS) and the world’s first ME-GI conversion on the world’s largest LNG tanker Q-Max. Since establishment to date, the shipyard has completed over 20 green shipping solution projects (BWTS installations and scrubber retrofits) for various types of vessels, such as LNG and LPG vessels as well as very large crude carriers (VLCCs).
N-KOM has demonstrated steady performance despite the global pandemic. Over 70 marine and offshore projects have been completed during the first half of 2020, and approximately two-thirds of the completed projects comprise ship repair and maintenance for various types of vessels, including oil and gas tankers. The team is busy with more than 20 ongoing projects. Currently, there are several vessels at the yard for repairs and maintenance works, as well as repair and maintenance ongoing for an unprecedented number of jack-up rigs.
N-KOM remains fully operational, with enhanced health and safety measures in place to safeguard employees, contractors and clients. Due to the pandemic, which led to higher freight rates for tankers, some clients have indefinitely postponed their scheduled dry dockings, yet the yard remains busy.
The Erhama bin Jaber Al Jalahma shipyard has the advantage of being securely located in Ras Laffan Industrial City (RLIC), 80 km north of capital city Doha. It is self-contained, mostly separated from other populated areas, thereby potentially presenting a lower risk of infection.
The outlook for N-KOM is business as usual. It is anticipating the arrival of several oil and gas tankers for maintenance, routine dry-docking inspections and BWTS installations in the coming months. N-KOM has also received several enquiries on the availability of dry-docking space from shipowners for vessels that are typically booked with Far East shipyards.
The yard secured a significant number of requests for green shipping solutions for the first half of this year. To date, N-KOM has secured over 10 energy vessels (LNG, LPG and tankers) as well as smaller offshore support vessels, between July to October 2020.
The expansion of Qatar’s energy exports will play a big part in N-KOM’s business plans. The yard has been involved in a number of offshore projects, supporting the critical offshore operations that are part of Qatar’s LNG expansion plans.
N-KOM says it will continue to stay abreast of regulatory, market and regional developments and its programme of proactive deployment of skills, capabilities and leadership will sustain growth in business to meet customer needs.
Gemak Group sees increased demand for retrofits
The Gemak Group of companies consists of Gemak Tuzla Shipyard, Gemak TGE Shipyard, Neta Steel & Pipe Fabrication and Gemak Altınova Shipyard. The Gemak Group has been involved in shipbuilding, repair and retrofits since 1969 and also some famous Turkish civil engineering projects, including building the teel shafts for Izmit Bay Bridge and fabricating the steel decks for the third Bosphorus Bridge.
Gemak Group reports that in comparison with the same period last year, there is a significant increase in scrubber and BWTS retrofit projects. It has successfully completed 26 scrubber and 67 BWTS retrofitting projects so far. There have been variations in the workflow due to the impact of Covid-19 and fluctuations in the global oil price. Demand for BWTS retrofits has been steady and may increase, says the company.
The group was not placed under pandemic lockdown, but flight restrictions did impact superintendents and service engineers from foreign countries who could not attend to projects. The group was able to find local alternatives for its customers, which include Hafnia Tankers, Norbulk Shipping, DFDS and Mol Tankship.
Gemak Group says it has now reached about 70% occupancy rate until end of the year and expects even higher demand for upcoming months. The group will continue with an organisation modernisation programme and structural developments with the aim of expanding its market share.
Newport Shipping launches dual-fuel retrofit deal
Newport News, the repair and conversions network for 12 shipyards comprising 28 dry docks worldwide, has announced the engagement of Igmar Loges, a well-known name in ship finance circles. His experience encompasses stints at DVB Bank in Amsterdam, HSH Nordbank in Hamburg, UniCredit Bank in Hamburg and in Singapore. His new role is head of the credit committee and managing director of Newport Shipping in Germany.
His arrival coincides with the latest Newport Shipping finance deal, for tanker operators looking to convert tankers to dual-fuel LNG power.
Newport Shipping says conversion with existing technology offers the shipping industry a credible and achievable mid-term solution to cutting emissions to meet the 2030 target.
“Retrofitting all the vessels currently at sea with greener technology is paramount if we want to attain the scale of emission-cutting that is required,” said Newport Shipping managing director Lianghui Xia. “As we see it now, apart from agreeing on the optimum fuel option, the other major challenge is that the agreement and implementation of the environmental agenda is governed by financial metrics” he said.
Newport Shipping offers clients seeking to make the switch to LNG a suite of full-service options, accompanied by supporting financial packages. “We offer our turnkey solution with a five- to seven-year payment plan, without fixed vessel mortgage collateral. This is a cost-effective solution to alleviate the upfront financial burden imposed on shipowners,” said Mr Xia.
Newport Shipping’s turnkey solution encompasses equipment procurement, full-scope design work, and on-site project execution at the shipyard with deferred payments.