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Opinion

CS LNG News Update: 20th December 2018

By CS LNG, Jan 7 2019 10:06AM

1. KOREAN SHIPBUILDERS BENEFIT FROM LNG CARRIER ORDERS AMID BACKING FOR LNG-POWERED SHIPS

South Korean shipbuilders are maintaining their dominance in the liquefied natural gas carrier construction sector in the face of some competition from yards in China and Japan. New orders placed for LNG carriers so far in 2018 have favoured the experienced shipbuilders in Korea, which have signed contracts for 80 percent of ships ordered, according to industry data. Korean shipyards signed contracts with owners around the world for 56 LNG carriers in total so far during 2018. This is out of the global total of LNG carrier newbuild orders of 65 made by shipping fleet owners and some new entrants to the market. French maritime storage technology company GTT has also been favoured by the Korean yards to supply the essential tank storage technology for the vessels. Many of the LNG carriers ordered have had capacity of around 174,000 cubic metres. This is regarded as the optimum size in terms of economics for using waterways such as the Panama Canal and operartions between the Atlantic and Pacific Basins. Among the Korean shipyard, the most dominant in the LNG market has been Hyundai Heavy Industries, the world's largest shipbuilder in terms of orders. Hyundai has signed agreements this year to build 25 LNG carriers for leading owners. The other two large shipbuilders, Samsung Heavy Industries and Daewoo Shipbuilding and Marine Engineering, have received 14 and 17 orders respectively. Analysts say that the healthy market for LNG newbuilds has enabled the Korean shipbuilders to meet their 2018 sales targets. The Hyundai LNG order book is valued at US$13.4 billion, surpassing its orders target. The Korean yards are also expanding their expertise to become leaders in constructing commercial vessels powered by LNG to meet new global emission restrictions. The Ministry of Trade, Industry and Energy has recently confirmed plans to back orders for around 140 LNG-powered vessels. The Koreans are planning to support private companies to place orders for the ships using LNG as fuel, including at least two ships in 2019 and more in an accelerating programme lasting through 2025.The government and the private sector also plan to invest 2.8 trillion Korean won ($2.5Bln) by 2025 to build infrastructure for bunkering to support LNG-powered ships visiting Korean ports.

[Source: LNG Journal 19/12/2018]


CS LNG comment: Against all of the odds 56 orders have been placed in 2018 which can only be good news for the charterers going forward. What is interesting is that despite these orders the pricing is holding steady which no doubt encourages more ordering! But whilst Korea may be grabbing the headlines for the conventional ships they are losing out to Chinese yards for the smaller ships.

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2. ARCTIC LNG CONTRACT GOES TO SAIPEM

Arctic LNG 2 has awarded a joint venture (JV) of Saipem and the Turkey-based oil and gas services company Renaissance a 2.2 billion-euro onshore engineering and construction contract in Russia, Saipem reported Wednesday. According to Saipem, the 2.2 billion-euro contract calls for the construction of three 6.6-million ton per annum (mtpa) liquefied natural gas (LNG) trains installed on concrete gravity-based structures and LNG storage facilities with 687,000 cubic meters of capacity. Novatek JSPC and Ekropromstroy Ltd. own 60-percent and 40-percent interests, respectively, in the project, which will be built in the western part of Gydan Peninsula in the Tazovsky District in Russia’s Yamal-Nenets autonomous administrative region. The project relies on the hydrocarbon resource of the Utrenneye field, whose reserves (Russian classification) total nearly 2 billion cubic meters of natural gas and 105 million tons of liquids, according to Novatek’s website. Saipem noted that the Arctic LNG 2 contract forms part of a strategic partnership deal that it signed with Novatek in 2016 for LNG-related activities. Each company in the 50/50 Saipem-Renaissance JV will receive approximately 1.1 billion euro for the project. “The awarding of this contract demonstrates how Saipem is fully integrated into the process of energy transition and represents a further success in the high added value LNG sector in which we have been operating for many years and in which, in the recent past, we have obtained important contracts,” Saipem CEO Stefano Cao said in a written statement emailed to Rigzone. “Finally, the signing of this contract reinforces the presence of Saipem in Russia, a country in which the company has an important track record in the realization of both onshore and offshore infrastructure.”

[Source: Rigzone 19/12/2018]


CS LNG comment: Yamal may have been a success story by coming on time and under budget but that could well be reversed with Saipem getting involved in Arctic LNG 2: have they ever delivered a project on time and on budget? Toscana being a good example.

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3. MOL, UNIPER PRESS ON WITH GERMANY’S 1ST FSRU PROJECT

Japanese shipping giant Mitsui O.S.K. Lines (MOL) has teamed up with Düsseldorf-based Uniper SE to develop a Floating Storage and Regasification Unit (FSRU) at Uniper site in Wilhelmshaven, Germany. The FSRU has a planned send-out capacity of 10 bcm/a and an LNG storage capacity of 263,000 cbm. As informed, the facility could be in operation as early as the second half of 2022. Under the terms of the deal, MOL intends to own, operate and finance the FSRU, while Uniper will serve as the project developer, working closely with the relevant authorities to receive the permits for the operation of the facility and to gather interest for regasification capacity from additional market participants. Wilhelmshaven has been chosen as it is the only German deep-water port and can be reached without any tidal constraints. In addition, there is already required infrastructure in place. The port is closely located to the existing pipeline and gas storage infrastructure. MOL said that the FSRU will be designed to allow for the loading of small scale barges to enable the use of LNG as marine fuel. Further, onward transportation of LNG on trucks will be possible. The project is Germany’s first LNG terminal which is aimed at strengthening the security of gas supply in Germany and diversify gas supplies, which is also being pursued at the political level in Germany and Europe. In addition to the agreement in respect of the FSRU Wilhelmshaven, Uniper and MOL entered into a binding transportation agreement. Under the agreement MOL will provide Uniper with shipping capacity equivalent to a 180,000 m³ LNG carrier. The agreement will commence in December 2020. Uniper said it intends to use the additional shipping capacity to optimize LNG volumes sourced from Freeport, U.S., and to further leverage its expanding LNG trading activities. Already in 2015 Uniper contracted approx. 0.9 mtpa of US LNG exports. The supply contract has a duration of 20 years.

[Source: World Maritime News 18/12/2018]


CS LNG comment: Congratulations to MOL.

But for Uniper it is sending a message to the market that any future tends could just be a bench marking exercise to negotiate a sensible rate from MOL who is clearly their chosen partner for shipping who will now have 3 units with Uniper.

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