Shell has chartered at least 22 LNG newbuildings to support its global gas portfolio, while a recently delivered FSRU heads to an historic Asian gas-to-power project
Six weeks into 2021 and eight LNG carriers have been ordered, pushing the global orderbook to 172 LNG carriers, with a total capacity of 24,428,062 m3, according to BRL Newbuilding Weekly. One of the world’s largest LNG shipping operators, managing and operating over 40 ships and with some 50 on time charter, Shell has been active in the chartering market, including striking a deal with South Korea’s Pan Ocean.
With ambitious plans to expand its LNG shipping portfolio, Pan Ocean inked long-term charter agreements with Portugal’s Galp Energia and Anglo-Dutch energy company Shell worth US$421M for LNG newbuildings ordered from Samsung Heavy Industries (SHI) and Hyundai Heavy Industries (HHI).
SHI will build a 174,000-m3 newbuild for US$183M, with delivery of the vessel in April 2023. This newbuilding will go on time charter under a deal inked on 30 December between Galp Energia and Pan Ocean, valued at an estimated US$115M. The five-year contract will start February 2023, with two Galp options that could extend the charter to 11 years.
With one 2008-built very large gas carrier, Pan Ocean reportedly placed LNG carrier orders in mid-December with HHI. Pan Ocean entered into a long-term time charter contract for two LNG carriers with Shell Tankers Singapore Private Limited on 15 December for an estimated US$306M. The seven-year contract will start from September 2024, with options that could extend the charter to 13 years.
Overall, the Anglo-Dutch energy major has chartered 22 LNG newbuildings “with more to come,” says BRL Weekly Newbuilding.
“We recently recorded four very large gas carriers for undisclosed account with Shell employment,” reported BRL. “Two of these have been confirmed for ownership of Pan Ocean Co, South Korea and marks their debut with commitments from Shell. The former intends to break into LNG in a big way.”
Most of the charters for the newbuildings have been secured at a rate of US$60,000 a day over seven-year periods, with options for extensions. “Brokers consider these to be very low rates, but permanent employment is procured by the shipowners,” said BRL, adding that all of Shell LNG vessels “are aimed at the lowest emissions status and likely to operate on WinGD dual-fuel propulsion.”
Seven LNG carrier newbuilds have been chartered by Shell from Norway’s Knutsen Group, the most recent one ordered from Hyundai Samho Heavy Industries (HSHI).
Another Shell charter
Shell has signed a long-term charter with Sovcomflot valued at US$165M for the 174,000-m3 LNG carrier SCF Timmerman, delivered by HSHI in January.
With an overall length of 299 m, beam of 46.4 m and depth of 26.5 m, the Liberian-flag vessel is built to Bureau Veritas class, and under the technical management of SCF Management Services (Dubai) Ltd.
SCF Timmerman is the third vessel in a series of new-generation Atlanticmax LNG carriers ordered by SCF Group in 2018. The lead vessel of the series, SCF La Perouse, was delivered to SCF in February 2020 and is time chartered to Total.
“The LNG carriers incorporate the latest technologies in terms of safety, environmental protection, and energy efficiency”
The second vessel in the series, SCF Barents, was delivered to SCF in September 2020 and is time chartered to Shell.
According to SCF, the LNG carriers in the series incorporate the latest technologies in terms of safety, environmental protection, and energy efficiency, with their fuel consumption substantially reduced compared to the preceding generation of vessels.
Each LNG carrier is equipped with GTT’s Mark III Flex cargo containment system, WinGD’s slow-speed, Otto-cycle, dual-fuel X-DF engine, and a system that reduces nitrogen oxide emissions while the vessel sails in liquid fuel mode. Additionally, all vessels of the series are among the first globally to feature a boil-off gas partial re-liquefaction system, which significantly reduces cargo losses while on long voyages or awaiting cargo operations.
FSRU for gas-to-power project
Among the other notable deliveries for Q1 2021 is Jawa Satu, which will serve as the floating storage and regasification unit (FSRU) for the first gas-to-power project in Asia, in connection with electric generation and gas-related facilities.
Pertamina president director and chief executive Nicke Widyawati marked the occasion by declaring: “This will be an historic moment in the development of the energy industry, especially in energy sustainability in Indonesia.”
Built by SHI, Jawa Satu will be deployed for 25 years supporting the gas-fired power plant. With an LNG storage capacity of 170,150 m3, Jawa Satu has a length of 292.5 m, beam of 43.4 m, and regasification capacity of 300 mmscfd.
FSRU owner Jawa Satu Regas (JSR) is a joint venture of Indonesia’s state-owned oil company Pertamina, Japan’s Marubeni and Sojitz Corp.
PT Jawa Satu Power, jointly formed by Pertamina, Marubeni, and Sojitz, owns and operates the onshore gas-fired power plant that will generate 1,760 MW of electricity. Commercial operations at the plant are expected to start in December 2021.
Located 14 km offshore in the Cilamaya Sea, east of Jakarta, Jawa Satu will store and regasify LNG, supplying fuel to the power plant via pipeline. Electricity produced by the plant is sold to the Indonesian state-owned electricity utility PT PLN (Persero).
The project is also a feather in the cap of Mitsui OSK Lines (MOL), which supervised the construction of the FSRU and will provide maintenance and operational services. MOL continues to build its presence in the FSRU market.
LNG hub development
Indonesia, meanwhile, has plans to develop itself as an LNG hub in Southeast Asia. It took a big step in January when it shipped its first international LNG cargo from the Arun LNG terminal in seven years. Pertamina subsidiary Perta Arun Gas (PAG) reported the cargo was shipped under a free-on-board (FOB) contract using the 2004-built LNG carrier Hongkong Energy. Under the LNG FOB contract, the buyer lifted the LNG from the Arun LNG terminal and transported it
to the Caofeidian (Tangshan) LNG regasification terminal, Hebei, China. Commercially managed by South Korea’s Sinokor Merchant Marine, the Marshall Islands-flagged LNG carrier has a capacity of 140,500 m3.
Currently, Arun LNG terminal has four LNG storage tanks with a total capacity of 460,000 m3, two of which are dedicated for Indonesia’s domestic demand and two for export.
PAG vice president of corporate strategic planning and business development Surkani Manan called the international LNG shipment “an important milestone for PAG”.
PAG has aspirations of making Arun LNG terminal one of the LNG hub players in the Southeast Asia region, according to Mr Surakani.To underpin its plans, PAG and its affiliates are studying a potential investment in an additional LNG tank with the aim of increasing the storage capacity. Other market opportunities being explored are fuel oil bunkering, LNG bunkering, cold storage and O&M services for LPG transhipment.