$2.2 billion! Hyundai Heavy Industries wins order for 10 more LNG carriers

With the global liquefied natural gas (LNG) market continuing to boom, orders for Qatar's "100-ship plan" are also being rapidly released. Hyundai Heavy Industries Group in South Korea has secured orders for 10 large LNG carriers in the second batch. To date, Korea Shipbuilding & Offshore Engineering has secured 12 LNG carriers from Qatar's "100-ship plan." Samsung Heavy Industries has previously secured 14, and Daewoo Shipbuilding & Marine Engineering has secured 4. To date, the three major South Korean shipbuilders have secured 30 LNG carrier orders worth over US\$6 billion from Qatar's "100-ship plan."

On July 7, Korea Shipbuilding & Offshore Engineering, the shipbuilding business holding company of Hyundai Heavy Industries Group, announced that it had signed contracts with shipowners in Europe and Oceania for the construction of 8 and 2 LNG carriers with a capacity of 174,000 cubic meters, respectively. The total value of the contracts is 286.9 billion South Korean won (approximately US\$2.2 billion). The vessels will measure 299 meters in length, 46.4 meters in width, and 26.5 meters in depth. The 8 vessels from the European shipowner will be built at Hyundai Heavy Industries' Ulsan shipyard, while the 2 vessels from the Oceanian shipowner will be built at Hyundai Mipo Dockyard in Yeongam County, South Jeolla Province. These new vessels are scheduled to be delivered to the shipowners successively before July 2026.

While Korea Shipbuilding & Offshore Engineering did not disclose detailed information about the shipowners, the South Korean industry speculates that this order is part of Qatar's 100-ship LNG carrier project.

A month earlier, Korea Shipbuilding & Offshore Engineering had just received the first batch of orders from Qatar's "100-ship plan." On June 7, the company announced that it had received orders for two 174,000 cubic meter LNG carriers from a European shipowner, with a total contract value of approximately 537.5 billion South Korean won (approximately US\$430 million). These two LNG carriers will be built at Hyundai Heavy Industries' Ulsan shipyard and are scheduled to be delivered to the shipowner successively before the end of June 2025. Although Korea Shipbuilding & Offshore Engineering did not disclose the specific names of the shipowners of these two LNG carriers, South Korean industry insiders said that this order is also part of Qatar's 100-ship LNG carrier project.

Compared to the price of US\$215 million per vessel for the first two 174,000 cubic meter LNG carrier orders, the price of the latest 10 orders is US\$220 million per vessel, an increase of US\$5 million.

Including these 10 LNG carrier orders, Korea Shipbuilding & Offshore Engineering has received 34 LNG carrier orders this year, ranking first among global shipbuilding companies. South Korean media has praised the company for leading the LNG carrier construction market.

To date, Korea Shipbuilding & Offshore Engineering has received 137 new vessel orders this year, with a total contract value of US\$17.3 billion, reaching 99.4% of its annual target of US\$17.44 billion.

Including this order, the three major South Korean shipbuilders have received 75 LNG carrier orders this year. Korea Shipbuilding & Offshore Engineering has received 33, ranking first among the three; Samsung Heavy Industries has received 24, ranking second; and Daewoo Shipbuilding & Marine Engineering has received 18, ranking third.

A relevant person from Korea Shipbuilding & Offshore Engineering said: "The company will build high-quality LNG carriers based on its rich construction experience and leading technology to improve customer satisfaction."

As the world's largest LNG producer, Qatar's expansion of the North Field will increase its annual LNG production capacity from 77 million tons to 126 million tons in 2027. To support the North Field expansion plan, Qatar officially launched the "100-ship plan" LNG project in early 2019, initially planning to build 60 LNG carriers to support the planned capacity expansion; in the next 10 years, Qatar's LNG carrier construction projects are expected to exceed 150 vessels.

In this regard, in April 2020, QatarEnergy first signed a preliminary agreement with China Shipbuilding Group for an LNG carrier construction project worth 20 billion RMB; in June 2020, QatarEnergy signed a memorandum of agreement (MOA) with the three major South Korean shipbuilders, including Daewoo Shipbuilding & Marine Engineering, for LNG carrier construction. According to the agreement, the three major shipbuilders will reserve most of their LNG carrier construction capacity for QatarEnergy until 2027.

Due to confidentiality agreements, the specific number of vessels in the relevant agreements has not been disclosed, but according to speculation from the South Korean shipbuilding industry at the time, the contracts for the three major South Korean shipbuilders were 45 vessels each, totaling 135 vessels; Hudong-Zhonghua's contract was at most 16 vessels. This is also the largest LNG carrier construction project in the history of global shipbuilding.

The South Korean shipbuilding industry stated that the scale of Qatar's 100-ship LNG carrier project is as high as US\$19 billion, and it is also a project that Chinese and South Korean shipbuilders are competing for. The project plans to officially place orders for the first batch of LNG carriers this year. In April this year, QatarEnergy signed a charter contract for four 174,000 cubic meter LNG carriers with MOL (Mitsui O.S.K. Lines), with MOL as the shipowner placing an order with Hudong-Zhonghua in China. This also marks the official launch of the first batch of LNG carrier projects under Qatar's "100-ship plan," with Chinese shipbuilders taking the lead.

South Korean industry insiders said that the global LNG carrier construction market was hot in the first half of this year, with the transaction volume exceeding the total of 86 vessels last year, and South Korean shipbuilding companies still showed an overwhelming advantage in the LNG carrier field. It is expected that in the second half of the year, South Korea will continue to demonstrate its strength in the LNG carrier field, centering on projects such as Qatar's 100-ship LNG carrier project. (Wang Chu)