HD Hyundai Heavy Industries (HHI) is expected to be the first company to win a second batch of liquefied natural gas (LNG) carrier orders for its LNG project from Qatar Energy, the state-run energy company of Qatar, beating out Chinese shipbuilders. The contract alone is worth US$3.9 billion for 17 ships.
On Sept. 27, Qatar Energy announced that it had signed a memorandum of agreement (MOA) with HD HHI to build 17 LNG carriers. Now, inking a formal contract is the only step left. “The contract with HD HHI for 17 vessels is the start of the second batch of our order,” Qatar Energy said.
With around 40 LNG carriers worth 12 trillion won (US$8.8 billion) expected to be ordered, the second Qatar project is one of the most sought-after orders in the world shipbuilding industry in the second half of 2023. This is because LNG carriers have been setting new records for highest ship price, with the price of a 174,000-cubic-meter ship recently rising to around 340 billion won.
When the first batch of the orders was placed, Korean shipbuilders Hanwha Ocean (19 ships), Samsung Heavy Industries (18 ships), and HD Korea Shipbuilding & Marine Engineering (17 ships) landed orders for 54 out of a total of 65 ships. The three Korean shipbuilders plan to take a big chunk of the second batch with their technological prowess. However, some experts point out that China’s recent signing of a long-term LNG purchase agreement with Qatar may be a variable factor.
Meanwhile, as international oil prices continue to fly high due to the extension of oil production cuts by Saudi Arabia and Russia, offshore plants that drill for oil and gas buried in the seabed and crude carriers that transport them are drawing much attraction from the market.
The total amount of the world’s investment in offshore plants linked to oil and gas and offshore wind power generation totaled US$89.5 billion through August this year, according to Clarkson Research, a U.K.-based shipbuilding and shipping market analysis organization on Oct. 3. Including this, final investment decisions (FIDs) expected by the end of this year total US$107.5 billion, the largest amount of investment in offshore projects in the past decade.
In addition to offshore plant investment, orders for crude oil carriers are also expected to hit a 10-year high.
Orders for Suezmax crude carriers stood at 44 units (1.34 million standardized gross tons (CGT)) in 2014 but fell to 18 units (550,000 CGT) in 2018 during a shipbuilding market downturn, and hit 13 units (390,000 CGT) and 11 units (330,000 CGT) in 2021 and 2022, respectively.
This year, however, orders for 41 vessels (1.24 million CGT) have been placed through the end of August. If the trend holds, this year is expected to see the highest number of crude carrier contracts signed in a decade.
The crude carrier ordering boom is being fueled by ship owners in shipping powerhouse Greece, with the bulk of the volume concentrated on select shipyards in China and Japan. While the Korean shipbuilding industry has focused on high-value-added vessels such as LNG carriers, its rivals in China and Japan are seemingly expanding their presence in the niche market of crude carriers.
Source: Business Korea