3.3 billion USD! Hongxing Shipyard secures orders for another 10 icebreaking LNG carriers.

Thanks to the technical support of its South Korean "partner," Russia's Zvezda Shipbuilding Complex has secured another order for 10 Arc7 ice-class LNG carriers from Russian energy giant Novatek for its Arctic LNG 2 project, totaling US\$3.3 billion. With the previous 5 vessels, Zvezda has accumulated over US\$5 billion in Arc7 ice-class LNG carrier orders.

On August 3, Smart LNG, a joint venture shipping company formed by Russia's Sovcomflot and Novatek, signed a letter of intent with Zvezda Shipbuilding Complex (Zvezda) for the construction of 10 Arc7 ice-class LNG carriers. The official construction contract is expected to be signed as early as this month.

It is understood that this is part of Novatek's commission to Zvezda Shipbuilding Complex for the construction of 15 ice-class LNG carriers for the Arctic LNG 2 project. Each LNG carrier is estimated to cost approximately US\$330 million, with the total project value nearing US\$5 billion. Last April, Sovcomflot ordered the first Arc7 ice-class LNG carrier from Zvezda Shipbuilding Complex, scheduled for delivery by the end of 2022 and ice trials by April 2023. Early this year, Smart LNG ordered another 4, scheduled for delivery in 2023.

As required, these ice-class LNG carriers will use GTT's Mark III cargo containment system, utilizing LNG as the primary fuel. The new vessels will have a power output of 45 megawatts, comparable to nuclear-powered icebreakers, allowing for safe LNG transport while breaking ice up to 2.1 meters thick at -52 degrees Celsius, meeting all requirements stipulated by the Russian Federation. This series of LNG carriers will all fly the Russian flag, and the Russian Maritime Register of Shipping (RS) will provide technical supervision during the construction of this series of vessels. All 15 LNG carriers will be delivered by 2024.

According to International Ship Network, Zvezda Shipbuilding Complex selected Samsung Heavy Industries as a technology partner in September last year. Samsung Heavy Industries will assist Zvezda Shipbuilding Complex in building the 15 LNG carriers for the Arctic LNG 2 project. South Korean industry insiders stated that due to the signing of a technical cooperation agreement, Samsung Heavy Industries will also receive a portion of the shipbuilding volume. Samsung Heavy Industries will be responsible for the steel pre-treatment and cutting processing of these 10 vessels, and the lower hull structure of these LNG carriers will also be manufactured at Samsung Heavy Industries' Geoje shipyard.

According to the requirements of the Russian government, the ice-class LNG carriers in the Arctic LNG 2 project must be built by its state-owned Zvezda Shipbuilding Complex, and components must be built in Eurasian Economic Union countries. The ice-class LNG carrier construction project of Zvezda Shipbuilding Complex marks the first time ever that a Russian shipyard has built LNG carriers. It should be pointed out that the former Soviet Union never built such vessels and had been purchasing them from overseas for many years.

With the ice-class LNG carrier orders from the Arctic LNG 2 project, Zvezda Shipbuilding Complex will become the first shipyard in Russia to build large LNG carriers and the second shipyard globally, after Daewoo Shipbuilding & Marine Engineering, to build Arc7 ice-class LNG carriers. The Russian government will provide Zvezda Shipbuilding Complex with a subsidy of approximately 50 billion rubles (approximately US\$701 million) to offset the difference between the construction cost of Zvezda Shipbuilding Complex's ice-class LNG carriers and the current market prices of Chinese and South Korean shipyards.

It is understood that Zvezda Shipbuilding Complex is Russia's largest shipbuilding group, established by a group of Russian enterprises led by Rosneft based on the Far Eastern Ship Repair Center (FESRC) in Bolshoy Kamen. The construction project of Zvezda Shipbuilding Complex was personally overseen by Russian President Vladimir Putin and is a key project in Putin's plan to revitalize Russia's shipbuilding industry.

According to the plan, after the completion of the second phase of construction in 2024, Zvezda Shipbuilding Complex will be able to build large LNG carriers, drilling ships, FPU/FPSO/FLNG, pipelayers, and various offshore drilling platforms and marine engineering equipment, becoming Russia's largest modern shipyard and the first domestic enterprise focusing on the manufacturing of large marine vessels.

According to Clarkson's statistics, Zvezda Shipbuilding Complex currently has a total order backlog of 20 vessels, approximately 1.251 million deadweight tons, mostly ordered by Rosneft and Sovcomflot. This does not include the 15 ice-class LNG carrier orders for the Arctic LNG 2 project. Russian media previously predicted that Zvezda Shipbuilding Complex's order backlog will expand to 120 to 130 vessels in the future.