Malaysia-based shipowner MISC is about to take delivery of three LNG carrier newbuildings. President and group chief executive officer Yee Yang Chien tells Karen Thomas why floating LNG is opening a new opportunity and why, when it comes to future fleet growth, MISC is thinking bigger
LNG World Shipping: what is the latest news on MISC’s plans to expand its fleet?
Yee Yang Chien: We own and operate 27 LNG vessels and two floating storage units (FSUs). Three remaining newbuildings will be delivered in the second half of 2017 and first-half of 2018. These three newbuildings are part of a fleet of five sister ships: the first two were delivered last year and early this year.
These vessels will be the first Moss-type vessels that we own and operate, and will serve the new Petronas floating LNG (FLNG) facility. Their delivery marks our entry into this new market. We will also be the first shipowner in the world to experience cargo loading from an FLNG unit.
What are MISC’s fleet-investment plans beyond 2017 and how will your LNG carrier fleet evolve and grow?
Charterers are now requesting larger vessels, between 170,000m³ and 180,000m³, to benefit from economies of scale. They also prefer fuel-efficient ships that have evolved from steam to dual/tri-fuel diesel-electric (DFDE/TFDE) to slow-speed diesel gas injection (SSD-Gi) propulsion systems.
Membrane remains the preferred containment system, mainly due to price competitiveness compared with self-supporting systems. We will continue to expand our fleet if we have secure, long-term employment arranged.
Doing this enables us to remain flexible and build vessels with a design specification that matches the requirements of our customer. Our current newbuildings are fitted with Moss containment systems and use reheat steam propulsion as this provides the optimum solution for our charterer.
How will MISC diversify its fleet?
The MISC fleet has always been diversified, with sizes ranging from 18,900m³ for the Aman-class vessels to 157,000m³ for our Seri B-class, DFDE vessels. We operate both steam and DFDE propulsion systems.
We remain flexible in terms of our vessels’ technical specifications to ensure that we meet project and/or charterer requirements. In small-midsize carriers, we are monitoring the development of LNG-bunkering vessels, and engaging with shipyards and several major LNG companies.
What are MISC’s plans to scrap or convert older tonnage?
All our older tonnage is chartered on long-term contracts. In 2012, we converted two of our first-generation vessels, Tenaga Satu and Tenaga Empat, into FSUs for a 20-year charter with Malaysia’s first regasification terminal in Malacca.
In 2015, we extended the contract for our Puteri-class vessels for another 10 years and so we put the vessels, which had reached their 20-year service life, through a repair and life-extension (RLE) programme at our own shipyard.
In 2016, we also secured a 10-year charter for Aman Sendai from January 2018. That vessel is now 20 years old and will also undergo RLE to service the new charter contract.
We continue to secure conversions and contract extensions, but have also been successful selling old ships into the second-hand market. We keep our options open in managing our older tonnage with preference for converting those assets into FSUs or FSRUs, selling back into the market or, finally, sending them for scrap at the right commercial consideration.
What are your plans for cutting costs and improving efficiency?
We continue to adopt the latest technology for our newbuildings to improve efficiency. We took delivery of our new Moss-type LNG carriers Seri Camellia and Seri Cenderawasih in September and January.
These newbuildings are powered by ultra-steam turbine (UST) technology, which gives 13 per cent higher efficiency than a conventional steam turbine plant. In addition, the pre-swirl duct and propeller boss cap fin fitted to the ships contribute energy savings of about 4 per cent.
The fitting of an X-twisted rudder to the vessels reduces cavitation and enhances manoeuvring performance, which also improves energy efficiency. The improved structural strength of the vessels is gained by the integrated hull structure (IHS) design. This enables a steel reduction of about 5 per cent, which makes the vessels lighter than conventional Moss-type LNG carriers.
Optimisation of the hull form was rigorously tested during the design and testing phase to minimise hull resistance, increase propulsion efficiency, reduce the power requirement and improve energy efficiency.
The use of low-friction anti-fouling paint on the vessels also reduces speed loss during operation. The coatings we use are free of Tributyltin and comply with IMO's antifouling system convention.
Last year, we successfully completed the FSU Tenaga Satu and FSU Tenaga Empat boiler retrofit project. After having shore power facilities installed, both were retrofitted with smaller deck boilers to deliver substantial fuel-consumption savings.
How is MISC responding to changing LNG trade patterns, particularly in Asia, andwhat opportunities/challenges does this present?
The LNG shipping business has become more competitive and we are seeing charter periods contracting, from 15 years to 10 years – or even seven. We are continuing to expand our capabilities to provide more than just conventional LNG shipping services. Our capabilities now include floating storage and regasification units (FSRUs), FLNG vessels, small-scale LNG and LNG bunkering.
We are also looking at LNG-to-power (L2P) projects for niche markets. These initiatives will ensure we can continue to maintain a long-term, sustainable revenue stream.
What progress has MISC made pursuing additional third-party time charters?
Our current third-party charterers are Yemen LNG (Total), where the project has halted but the charters are valid, and with International Gas Transportation (IGTC) and Koch Commodities Europe. Last year, we successfully expanded our third-party charterer profile with several spot-shipping requirements with Brunei LNG, Pluto LNG and Shell.
Our previous third-party charterers include Engie, BP, BG, Trafigura and Gladstone LNG. We continue to expand our third-party portfolio by pursuing business opportunities in Europe, India and Indonesia.
What are MISC’s plans to expand overseas?
As a global player that has provided LNG shipping services to major companies BG, Engie, Yemen LNG, BP, North West Shelf LNG, Shell, KOCH, Trafigura, Brunei LNG, Gladstone LNG and Pluto LNG, we continue to pursue business opportunities globally.
MISC’s LNG business is headquartered in Kuala Lumpur, assisted by regional offices in Yokohama in Japan and London, UK.
Our presence in Yokohama is important because most of our LNG vessels call at Japanese regasification terminals. This provides a rapid response, ensuring smooth and efficient operations throughout a vessel's charter period.
Our London office provides the KL team with continuity in business development and supports our five-year strategy aspiration to expand our business presence in the Atlantic region.
How will MISC adjust as other LNG-producing states overtake Malaysia, notably Australia and the US?
Most of our vessels are chartered by Petronas delivering cargoes originating in Malaysia. However, we continue to pursue business opportunities globally. In the past, we have pursued shipping requirements for Sabine Pass in the US and Australia’s Gladstone LNG, North West Shelf and Ichthys LNG projects. We will continue to pursue other business opportunities.
MISC in figures
Live LNG carriers 27
Live fleet capacity (m³) 3.5 million
Floating storage units (FSUs) 2
FSUs' total capacity (m³) 260,000
LNG carrier orderbook 3
Orderbook capacity (m³) 450,600