By Antonis Tsimplakis

 

 

The opening of the Chinese shipbuilding industry to the construction of LNG carriers is a strong alternative solution for Greek shipowners, who are looking for free slots, which do not exist, in South Korean shipyards.

 

According to the data of Naftemporiki, the shipping group of Giorgos Prokopiou has already signed a letter of intent with the Chinese shipyards Dalian Shipbuilding Industry Co (DSIC) for the construction of two LNG carriers, with a capacity of 200,000 cubic meters each, with an option for construction of two more of similar specifications.

 

New slots for LNG carriers are being "opened" in Chinese shipyards, with orders constantly rising.

 

The "consolidation" of liquefied natural gas as the intermediate fuel for the green transition of the planet, the vertical increase of the freight market in the sector after the Ukraine crisis and the sanctions imposed on Russia, as well as the absence of free berths in the Korean shipyards specializing in these constructions, have led many shipowners to the China "solution".

 

In China, at least three shipyards that manufacture LNG carriers have been opened over the years. The country which has been driving the global economy in recent years has 19 orders from foreign shipowners for LNG carriers this year, which may increase before time runs out, according to a Reuters report.

 

Chinese shipyards this year have won a total of 45 LNG tanker orders worth about $9.8 billion-five times the order values of 2021, according to Clarksons Research.

 

By the end of November, Chinese yards had increased their LNG order book to 66 from 21, giving them 21% of global orders. In previous years, Chinese yards built just 9% of the existing global LNG fleet, according to Clarksons.

 

Rapid progress

 

China is making rapid progress in building liquefied natural gas (LNG) tankers, as local and foreign shipowners turn to its shipyards for the specialized vessels because major shipyards in South Korea lack berths.

 

Three Chinese shipyards - only one of which has experience building large LNG tankers - won nearly 30% of this year's orders for 163 new natural gas carriers, vying for a share in a sector where South Korea usually takes the lion's share .

 

LNG carrier orders for Chinese shipyards tripled as China's natural gas traders and ship operators hit the market hard after a surge in freight rates due to upheaval in global energy supply flows due to Russia-Ukraine conflict and penalties it caused.

 

With South Korean units inundated with orders to service the massive expansion of Qatar's new project, Chinese yards have also attracted more foreign deals, including the first overseas orders for some shipbuilders only recently certified to build LNG carriers.

 

The Chinese shipyards

 

The Shanghai-based Hudong-Zhonghua Shipbuilding unit is the only Chinese shipyard with experience in building large LNG carriers, having delivered dozens of such vessels since 2008. This year, it took 75% of China's new orders.

 

Hudong-Zhonghua shared 26 orders from local owners - up from nine in the past two years - with other units such as China State Shipbuilding Corporation, Dalian Shipbuilding Industry and Jiangnan Shipyard.

 

Two other shipyards - China Merchants Heavy Industry (CMHI) and Yangzijiang Shipbuilding (YAZG.SI) - were certified to build large LNG carriers this year and have attracted interest from Chinese and foreign shipping companies. LNG tankers, like containerships, are among the most difficult ships to build and take up to 30 months.

 

Jiangnan shipyards are also building their first 80,000 cubic meter LNG on behalf of Guangdong-based JOVO Energy and won an order in March from Abu Dhabi National Oil Company (ADNOC) for two 175,000 cubic meter LNG carriers.

 

China's demand for LNG tankers is being driven by the need to ship 20 million tonnes of natural gas a year from the United States, which is expected to increase the global LNG fleet by 33% over the next five years, said Robert Songer, an analyst at commodities consultancy ICIS. China needs about 80 ships to carry US LNG.