Iberica Knutsen reinforces Knutsen’s Spanish ties

The LNG carrier activities of Knutsen OAS are closely aligned with Spain’s booming gas market, as its latest newbuilding highlights

Knutsen OAS Shipping of Haugesund, on Norway’s southwest coast, is known for its activities in the chemical/product tanker sector, as the operator of the world’s largest fleet of purpose-built, dynamically positioned shuttle tankers and, increasingly, LNG carriers.

Delivered in August 2006 by Daewoo Shipbuilding & Marine Engineering (DSME), the 138,000m3 Iberica Knutsen is the fourth LNG carrier in the Knutsen fleet and the first to be built in Korea. The other LNG vessels sporting the company’s colours are a pair of 138,000m3 vessels built in Spain -- Cadiz Knutsen at Puerto Real and Bilbao Knutsen at Sestao – and Pioneer Knutsen, at 1,100m3, the smallest LNGC in the world. The latter vessel, which was constructed at the Bijlsma yard in The Netherlands, is engaged in Norwegian coastal gas distribution duties.

Knutsen OAS enjoys strong links with Spain and Spanish LNG carrier owners and charterers. Cadiz Knutsen and Bilbao Knutsen, which were ordered in tandem with Marpetrol of Spain, are already serving on long-term charters, with Union Fenosa and Repsol respectively, for the shipment of LNG to Spain. Amongst other notable achievements, Cadiz Knutsen carried Egypt’s first-ever LNG export cargo, loading 136,000m3 at Damietta in January 2005 for carriage to Huelva on behalf of Union Fenosa Gas.

Iberica Knutsen was ordered in 2003 when the price paid for a new conventional size LNG carrier was some 30 per cent less than that pertaining today. As explained below, however, conventional size LNG carriers being ordered today are somewhat different to Iberica Knutsen.

Iberica Knutsen will begin a 20-year charter, with two five-year options, with Repsol and Gas Natural in 2009 and, until that date, alternative employment is being arranged. The ship was fixed with BP, for example, for the loading of a cargo at Ras Laffan on its maiden voyage.

Repsol and Gas Natural have consolidated their LNG marketing and supply chain activities into a 50/50 joint venture named Stream. The Stream chartered fleet now stands at 11 LNG carriers, including Bilbao Knutsen and, from 2009, Iberica Knutsen.

In addition to the four ships in service, the Norwegian owner has four LNGCs on order: three further ships at DSME and one at the Construcciones Navales del Norte yard (formerly operated by IZAR) in Sestao, Spain. The latter vessel, to be named Sestao Knutsen, will be of 138,000m3 in size and will be delivered at the end of 2007. Including shuttle and chemical tankers, Sestao Knutsen is the 12th ship that the Sestao yard has built for for Knutsen since 1989.

The ship was recently launched and is now the subject of an extensive fitting out operation. Construcciones Navales del Norte is one of the few remaining shipyards that still launches large vessels from a traditional slipway; most shipbuilders today use a drydock. It is currently the last LNGC under construction in Spain. On delivery, Sestao Knutsen will enter into a long-term charter with Stream for the carriage of LNG to Spain.

There is also a strong Spanish connection to Knutsen’s DSME newbuildings. Stream has signed long-term time charters for three 173,000m3 LNG carriers for use in the carriage of gas produced by Peru LNG, commencing on project startup in 2010. The charters are for a period of 20 years, with an extension option of five years. Two of the ships will be provided by Knutsen OAS, while Spain’s Armador Elcano will supply the third. Stream anticipates that its LNGC fleet will stand at 16 ships by the time the three Peru LNG vessels are completed in 2010.

Knutsen OAS reports that its part of the deal represents the largest single contract in its history. The intention is to operate the Peru LNG carriers with Norwegian officers and to run the ships from the new export terminal to be built at Pampa Melchorita, 200km south of Lima, to Spain. Pampa Melchorita terminal, which is due for completion in mid-2010, will be the first LNG export plant in South America.

All three Knutsen OAS LNG carriers under construction at DSME are due for delivery in 2010. Although the owner does not have any employment lined up for the third ship, it is confident that, with the current rapid expansion of the LNG trades, it will have no problem securing work. Knutsen was anxious to secure the available berth slot at Daewoo amongst growing competition for newbuilding opportunities.

One possible outlet, for example, is the proposed Gassi Touil LNG export project in Algeria, with which Repsol and Gas Natural are involved. The pair is anxious to achieve a 2010 startup for that project and, in developing an integrated approach to the LNG supply chain under the Stream banner, are tendering for the ships that will be required to serve that project.

Unlike the other, steam turbine-powered vessels in its fleet, the three DSME newbuildings for Knutsen OAS will have dual-fuel diesel electric (DFDE) propulsion systems. At 173,000m3, they are also examples of the industry’s current drive to maximise the cargo-carrying capacities of ‘conventional-size’ LNG ships.

Quite apart from the extra hull space available for cargo provided by the use of DFDE propulsion compared with steam, ship designers have been specifying slightly beamier ships. Thus, for a ship of virtually the same overall length as a conventional 145,000m3, steam turbine ship, the new generation is being provided with tank capacities up to 20 per cent greater. Yet such ships are still able to visit all existing terminals without restrictions. The three Knutsen OAS ships represent the largest conventional size LNG ships on the DSME orderbook. LNG