Newbuilding boom continues into the new year, as LNG owners order 11 vessels in January, with bullish outlook underpinned by global demand for gas
2023 marks the Year of the Water Rabbit, and LNG shipping has gotten off the blocks quickly, with 11 LNG carrier orders placed in January. In one of the latest orders, Capital Gas pulled the trigger on options for two 174,000-m3 LNG carriers after slots opened up at Hyundai Heavy Industries (HHI).
The opportunistic Greek shipowner snapped up the newbuilding berths at the South Korean shipyard, which were available at “earlier delivery slots due to delays in the Mozambique gas carrier requirements which are now put back to 2027 to 2028,” according to BRL Weekly Newbuilding Contracts. Potentially, between 17 and 18 LNG carriers will be required to be built by South Korean shipyards for Mozambique.
The 174,000-m3 newbuilds for Capital Gas will be delivered in Q3 2026 and are believed to be options held by the Greek owner “although kept under the radar,” said BRL.
Another Greek shipowner, Dynagas, has increased its commitment at HHI from three to six 200,000-m3 LNG carriers. The latest three of these large-capacity LNG carriers will cost Dynagas US$261.3M per unit for a total price tag of about US$783.9M. Deliveries start from early 2026.
During January, Japan’s Mitsui OSK Lines (MOL) reserved a building slot at Daewoo Shipbuilding & Marine Engineering (DSME) for a single LNG carrier for delivery in December 2026.
Out of the Middle East, Asyad Shipping, which manages Oman’s six-vessel gas carrier fleet, has contracted two LNG carriers from Hyundai Samho Heavy Industries (HSHI). These new vessels, which cost US$250.3M apiece, will replace older units, said BRL. Deliveries are set for the end of 2025 and early to mid 2026.
“FIDs planned for Q1 2023 could remove the majority of available newbuilds through to 2026”
This was confirmed by Asyad Shipping and Asyad Drydock chief executive Ibrahim Al-Nadhairi in announcing the order when he said the shipping line was pursuing “a more balanced and diversified fleet, which is better suited to provide international customers with reliable and efficient solutions and enhances Asyad Group’s competitiveness and position as a strategic logistics partner for major global energy players.”
Mr Al-Nadhairi said, these “fifth-generation 174,000-m3 LNG carriers meet the highest international standards of environmental and commercial sustainability,” boasting “58% less fuel consumption than the older, second-generation 138,000-m3 LNG carriers.”
The order for new tonnage is underpinned by significant new production of LNG and export capacities coming on stream in 2025-2026, said the company.
Record-shattering 2022
This spate of orders in January continues the momentum of 2022, which saw record-shattering orders for LNG carriers valued at a whopping US$39Bn. According to Clarksons Research managing director Steve Gordon, shipyards signed deals to construct a record 182 LNG carriers. At 36% of compensated gross tons (CGT), LNG carriers represented the largest shipbuilding segment in the global order book, followed by 350 container ships (29% CGT) and 69 car carriers (2.4% CGT).
Overall, while it was an active shipbuilding picture in 2022, global newbuild order volumes feel year-on-year 20% in CGT terms, according to Mr Gordon. In his analysis, the shipbroker said more complex ships being ordered — namely those record number of LNG carriers and alternative fuelled-ships (a record 61% of all tonnage ordered) — helped to support a 6% jump in the total value of orders to US$124.3Bn.
In Mr Gordon’s analysis, he put the average price for a 174,000-m3 LNG newbuild at US$248M at year’s end, up 18% from US$210M in 2021. Mr Gordon sees a “continued flow of LNG” ordering in 2023.
Positive outlook for newbuilding
Howe Robinson Partners senior broker for LNG Debbie Turner, is also bullish on the LNG shipbuilding market. “It is all very positive,” Ms Turner told LNG Shipping & Terminals in November. “Without a doubt, we’re moving forward to transitionary fuels, but with what’s happening, particularly in Europe, we need LNG to replace pipeline gas. The world is changing rapidly, and we need to make more investment decisions quickly to ensure we have sufficient gas around the world to meet the growing demand.”
“Air lubrication can cut a vessel’s fuel consumption and emissions by 5-10%”
Ms Turner said the current newbuilding boom “from the Korean yard perspective, has been a long time in the making,” adding, “the boom is made up of very large orders.” One of the drivers she pointed to is Qatar’s need for some 150 ships for its North Field expansion project.
“It is all about supply and demand,” she said. “There are insufficient yard slots to meet the rising demand for LNG carriers.”
She continued: “Up until 2030, I cannot see this boom being curtailed. We need the LNG as that transitionary fuel, and as a consequence, we need to have the ships to transport that product,” she concluded.
And, the spot market will remain tight, with the majority of newbuildings committed, with less than 30 available to the end of 2026, according to Howe Robinson Partners. These could disappear, too. Hoew Robinson Partners warns that FIDs planned for Q1 2023 could remove the majority of available newbuilds through to 2026.
Orders ‘bubble up’ in China
With QatarEnergy still holding a number of options at South Korean and Chinese yards, shipyard slots remain tight. This has opened the door for China, where five shipyards have now signed orders to build LNG carriers.
But Qatar is not the only one in the Middle East with skin in the LNG game. Abu Dhabi National Oil Co (ADNOC) has moved more aggressively to upgrade its LNG carrier fleet. It has six 175,000-m3 LNG carriers on order at China’s Jiangnan Shipyard. Of note is that all six will be fitted with Silverstream air lubrication systems (ALSs). Silverstream’s system generates a uniform carpet of microbubbles across the full flat bottom of a vessel, reducing the friction between the hull and the water. Air lubrication can cut a vessel’s fuel consumption and emissions by 5-10% regardless of sea conditions, according to Silverstream.
China Merchants Energy Shipping (CMES) and Silverstream Technologies agreed to install the air lubrication aboard four 175,000-m3 LNGCs under construction at Dalian Shipbuilding Industry Co.
Overall, Silverstream has been contracted to install ALSs in 23 LNGCs, eight of which are already in service.
The CMES newbuilds are the first Chinese owned and built LNG carriers fitted with Silverstream ALSs.
“There are insufficient yard slots to meet the rising demand for LNG carriers”
On 16 January, China’s Hudong-Zhonghua Shipbuilding held a keel-laying ceremony for a 174,000-m3 LNG newbuild for China National Petroleum Corp (CNPC) and COSCO Shipping LNG. Equipped with WinGD X-DF propulsion, newbuild H1834A is the fourth LNG carrier for the Chinese companies.
Just three days before the keel laying, H-Z Shipbuilding marked the start of construction on two different classes of vessel. One was the third in a series of 15,500-TEU container ships for Seaspan Corp, and the other is part of a series for four 174,000-m3 LNGCs for MOL China and COSCO Shipping LNG Investment for charter to Qatar Energy. These ships are based on the Chinese shipbuilder’s Changheng series design, with an overall length of 299 m, beam of 46.4 m and depth of 26.25 m.
Malaysia’s third FLNG
Samsung Heavy Industries (SHI) will build a nearshore floating LNG vessel for Malaysia for delivery in February 2027, under a US$1.58Bn contract from PETRONAS. SHI is part of a consortium with Japan Gas Corp (JGC), which announced the award of the Engineering, Procurement, Construction, Commissioning (EPCC) contract in January.
This facility will be the first nearshore FLNG in the world as well as the third floating LNG plant to be constructed for offshore gas fields in Malaysia, with a minimum production capacity of 2 mta. JGC’s main responsibilities will cover the engineering, procurement and commissioning work for the FLNG topside, the associated onshore facilities, as well as the management of the overall project.
Consortium partner, SHI, will be responsible for the FLNG hull EPC work and the modular fabrication of the topside.
The JGC Group has worked closely with PETRONAS for decades, having executed EPC projects for all nine trains of the LNG plants at the PETRONAS LNG Complex in Bintulu, Sarawak, which has an annual production capacity of about 29 mta; in 2021 it completed for the world’s first deep-water FLNG facility, PFLNG Dua, for PETRONAS.
LNG bunker vessel milestones
In the LNG bunker vessel sector, several milestone developments were marked, with German shipbuilder Flensburger Schiffbau Gesellschaft (FSG) in line to build three 4,500-m3 LNG bunker vessels for a European consortium, consisting of Nordic Hamburg, Titan Clean Fuels, and WESMAR. The German Government is backing the deal to a tune of €62M (US$67.4M), with each LNGBV designed to handle LNG, bioLNG or synthetic natural gas initially and able to be upgraded at a later date for ammonia bunkering. All the LNGBVs will be delivered by 2026.
Spain’s first small-scale LNG carrier, Haugesund Knutsen, is now under long-term charter to Shell following its delivery to owner Knutsen OAS. The Norwegian owner reported the 5,000-m3 LNG bunker vessel was delivered by Spanish shipbuilder Astilleros Armon in Gijón on 23 December. The vessel is specially designed for supplying LNG to gas carriers and gas-fuelled cruise ships and ferries.
Classified by Bureau Veritas, the Spanish-flagged Haugesund Knutsen will use the Enagás LNG terminal in Barcelona for the loading and supply of LNG.
Shell signed the charter agreement for the bunker ship in May 2021.
© 2023 Riviera Maritime Media Ltd.