Korean and Chinese shipbuilders are competing for a mega order from Qatar for 80 units of LNG tankers worth more than 18 trillion won. Yet Korean shipbuilders are confident they can win the order as they are technologically superior to their Chinese rivals in the LNG tanker sector.
Three Korean shipbuilders — Hyundai Heavy Industries, Samsung Heavy Industries and Daewoo Shipbuilding & Marine Engineering — and Hudong-Zhounghua Shipbuilding of China, have submitted proposals to Qatar Gas, a subsidiary of Qatar National Petroleum Co. Japan’s Kawasaki Heavy Industries withdrew from the race.
Industry watchers expect Qatar Gas to place an order for LNG carriers between the second quarter of this year and the end of this year. The order volume is expected to reach 80 units, with 40 confirmed units and 40 optional units. The total order value is estimated at US$15 billion. The vessels will be delivered between 2023 and 2027 in accordance with Qatar’s LNG project schedule. Qatar is the world’s No. 1 LNG producer. It has not made major new investments in LNG since 2004. However, as strengthened environmental standards around the world, including China and Europe, sparked off a spike in demand for LNG, the company has begun to expand production facilities and is preparing to order LNG carriers.
Domestic and foreign shipbuilding experts expect that the three Korean shipbuilders will compete among themselves for the mega deal. This is because the Korean shipbuilders’ technological excellence is globally recognized. They won more than 90 percent of LNG carrier orders in 2019. They also landed the entire order for 53 LNG carriers from Qatar in 2004.
The Korean shipbuilders are also expected to benefit from the fact that the only foreign competitor, Hudong-Zhounghua Shipbuilding, built a ship that had a big problem in stability. An LNG carrier built by the Chinese shipbuilder in 2018 was retired in 19 months after launch due to a major engine failure. “In 2018 and 2019, Korean shipbuilders hogged 97 percent of LNG carrier orders, and Chinese shipbuilders took only 3 percent,” said researcher Bae Se-jin of Hyundai Motor Securities. “Considering that two out of three orders received by Chinese shipbuilders came from Chinese clients, Korean shipbuilders are highly likely to continue dominating the LNG tanker market.”
Korean shipbuilders’ LNG carrier technology is rated the world’s best. In particular, the Korean shipbuilders are unrivaled in terms of full re-liquefaction system (FRS) technology, which re-liquidates natural gas evaporating from a cargo hold during the operation of the LNG carrier and puts it back to the cargo hold.
“While the average price of a bulk ship is US$25 million, that of an LNG tanker is US$200 million per ship,” said an official of the shipbuilding industry. “Winning LNG tanker orders will give a much-needed boost to the Korean shipbuilding industry.”
Source: Business Korea