Qatar Petroleum contract adds next-generation vessels to China’s growing portfolio of FSRUs, LNG bunkering vessels and world-scale LNG carriers
China’s Hudong-Zhonghua Shipbuilding has been catapulted into the spotlight following the signing of a US$3Bn shipbuilding agreement with Qatar Petroleum (QP) in April. China’s largest shipbuilding export contract to date, the prestigious deal with the world’s largest LNG producer burnishes Hudong-Zhonghua’s LNG ship reputation and growing order book. The Chinese shipbuilder now has fourth-generation world-scale LNG carriers, floating storage and regasification unit (FSRU) vessels and LNG bunkering vessels in its portfolio.
The shipbuilding capacity reserved by QP until 2027 will meet part of its future LNG carrier fleet requirements, including those supporting its ongoing six-train North Field expansion projects and fleet renewal.
Newbuild rates for LNG carriers with capacities of 170,000 m3 are US$189M, according to ship broker Fearnleys, suggesting roughly 15 to 20 LNG carriers could be built by Hudong-Zhonghua Shipbuilding. China’s only world-scale LNG vessel builder, Hudong-Zhonghua Shipbuilding is part of China State Shipbuilding Corp (CSSC).
Amid the uncertainty injected into the energy market by the Covid-19 pandemic, the agreement signals QP’s confidence in a recovery in the global LNG market, its plans to expand its LNG production capacity and China’s ability to construct new-generation LNG carriers.
That confidence was reflected in remarks at the virtual signing ceremony by Minister of State for Energy Affairs and QP president and chief executive Saad Sherida Al-Kaabi,who said: “Today, we have taken yet another concrete step to reinforce Qatar’s commitment to its global reputation as a safe and reliable LNG producer at all times and under all circumstances.” He continued: “By entering into this agreement to reserve a major portion of Hudong’s LNG ship construction capacity through the year 2027, we are confident we are on the right track to ensuring our future LNG fleet requirements will be met in due time to support our increasing LNG production capacity.”
Minister Al-Kaabi also noted: “The value of this landmark agreement has the potential to be well in excess of QR11Bn (US$3Bn), depending on our requirements and the extent of China’s LNG shipbuilding capacity expansion. To this end, QP is pleased and proud to support the expansion of the LNG ship construction capacity in China and looks forward to further growth in the near future.”
“The deepening “belt and road” co-operation between Qatar and China is unsettling for South Korean shipbuilders”
Shockwaves in South Korea
While the video conference signing ceremony was held between Doha, Qatar, Shanghai and Beijing, China, its shockwaves were sure to be felt more than 800 km away in the cities of Ulsan and Geoje, South Korea. Those cities are headquarters to South Korea’s ‘Big Three’ shipbuilders: Hyundai Heavy Industries (HHI); Daewoo Shipbuilding & Marine Engineering (DSME); and Samsung Heavy Industries (SHI). Depending on its needs, QP could order upwards of 80 new LNG carriers, with the expectation that it will sign contracts with South Korean shipbuilders for additional LNG carriers later this year.
Still, the deepening “belt and road” co-operation between Qatar and China is unsettling for South Korean shipbuilders, which only secured orders for two LNG carriers in Q1 2020. Against the backdrop of depressed oil prices, maritime consultancy Clarkson Research is also forecasting a slow year for shipbuilding, with as few as 756 ships ordered in 2020, down 23.6% from 2019.
Also speaking at the virtual signing ceremony, CSSC chairman Lei Fanpei said: “The 174,000-m3 LNG carrier for QP is the latest generation of LNG carrier design customised by CSSC for Qatar. The carrier has the world’s leading performance for efficiency, reliability and environmental conservation, demonstrating CSSC Group’s great efforts and commitment to the success of QP’s projects.” Mr Fanpei noted the deal was “an important milestone.”
The North Field expansion projects will increase Qatar’s LNG production capacity from 77 mta to 126 mta. To support Qatar’s LNG capacity expansion, QP could order 100 or more LNG carriers to underpin the shipping needs for local and international LNG projects, and replace some of its existing fleet.
These newly contracted vessels are significant in that they will be based on Hudong-Zhonghua’s own G4 + Changhui series design. While details of the vessel design were scant at press time, we do know that each will have a capacity of 174,000 m3. The shipbuilder says the vessels will have “low (energy) consumption, strong adaptability of the liquid cargo handling system to different routes, and excellent upgrade compatibility. “
Further says Hudong-Zhonghua, the LNG carrier’s loading capacity has been increased by 800 m3 as compared with previous generations of the same ship type, and the energy consumption of the entire ship’s power system has been reduced by 8%. No details were available on the ship’s cargo containment system, although all 12 of the LNG carriers on order at Hudong-Zhonghua have GTT No96 or Mark III membrane systems.
First FSRU launched
Two similar-sized FSRUs to the QP vessels are under construction at Hudong-Zhonghua for Greek shipowner Dynagas. Transgas Power, the first of the two 174,000-m3 FSRUs, was launched in April. Each vessel will be fully capable of trading, making them appealing to charterers as either a long-term import terminal or transport. As a global one-stop solution for LNG imports, the FSRU has special equipment that integrates various functions of LNG receiving, storage, transfer, regasification and external transportation.
With an overall length of 294 m, beam of 46.95 m and a depth of 26.25 mm, each FSRU is equipped with three gasification chains, and space for upgrading and installing a fourth chain. The shipbuilder says the latest seawater/glycol, steam/glycol composite heating system is used to achieve open seawater heating and closed steam heating. Various regasification modes, such as series heating, can be used in a wide range of seas around the world, with a rated gasification capacity of about 3.8 mta.
When used for LNG transport, the dual-fuel, diesel-electric vessel will have speed of 19.5 knots. Both FSRUs, which are being built to ABS class and will fly the Cypriot flag, are expected to be delivered in 2021.
Despite the Covid-19 pandemic, the Chinese shipbuilder also conducted gas trials in April for Gas Agility, the largest LNG bunkering vessel built to date.
With a capacity of 18,600 m3, Gas Agility will go on long-term charter to French oil and gas giant Total in Northern Europe when it is delivered in Q2 2020. Built at a cost of about US$47M, Gas Agility is owned by Japan’s Mitsubishi OSK Lines (MOL). Constructed to Bureau Veritas class, the vessel will be used to refuel a series of nine 23,000-teu, ultra-large container ships owned by France’s CMA-CGM and other dual-fuel ships.
CMA-CGM signed a 10-year contract in 2017 with Total to supply 300,000 tonnes of LNG per year starting in 2020. This past December, CMA-CGM reached another agreement with Total to provide 270,000 tonnes of LNG over a 10-year period for a series of 15,000-teu containerships that will operate between Asia and the Mediterranean.
Those container ships will be supplied LNG by a second identical 18,600-m3 LNG bunkering vessel that will operate in the Mediterranean out of the Port of Marseille-Fos. Hudong-Zhonghua Shipbuilding will deliver that vessel in 2021.
Concerns related to the Covid-19 pandemic did arise during construction and gas trials for Gas Agility. But amid travel restrictions imposed due to the coronavirus outbreak, equipment manufacturers were able to provide remote support to the shipyard via video conferencing.
Using online consultations and enacting strict ‘anti-epidemic measures’, China’s Shenergy Group supported the shipyard during refueling operations during gas trials.
Personnel from Shenergy and Hudong-Zhonghua co-operated closely to carry out matching tests, discharge arm connection, hot emergency shutdown (ESD) tests, discharge arm cooling and other tests.
After travel restrictions were lifted, Norway’s Kongsberg, the supplier of the Central Integrated Monitoring System (IAS), dispatched engineers from its European headquarters to Shanghai in time to participate in the gas trial.
Engineers at French reliquefaction equipment supplier Air Liquide in Europe were able to use network video connections to remotely support domestic service engineers for commissioning and submission.
To ensure the sea trial plan ran smoothly and to overcome the time difference, the service providers based abroad gave up weekend breaks and co-operated with the sea trial team to carry out the inspection in 24 hours, said the shipyard.
The 135-m LNG-fuelled bunkering vessel has GTT’s Mark III Flex cargo containment system and full reliquefaction capability of boil off gas.
The ship is equipped with two azimuth thrusters and a bow thruster that will allow it to carry out independent lateral berthing operations in challenging weather conditions. The systems also help realise ‘home delivery’, to berth various LNG receiving ships independently.