Order for 6 of the world's largest LNG-powered vessels! MOL places its first order with a Chinese shipyard

To achieve its goal of deploying 90 LNG-powered vessels by 2030, Japanese shipping giant Mitsui O.S.K. Lines (MOL) is accelerating the expansion of its LNG-powered fleet and has placed its first-ever order for six LNG-powered tankers and bulk carriers at a Chinese shipyard. These are currently the world's largest LNG-powered tankers and bulk carriers.

Dalian Cosco KHI Ship Engineering Co., Ltd. received an order for two VLCCs, becoming the second shipyard in China to build dual-fuel VLCCs.

On August 25, Mitsui O.S.K. Lines signed a contract with Kawasaki Heavy Industries for the construction of two 309,000-deadweight-ton very large crude carriers (VLCCs). The new vessels will be built by Dalian Cosco KHI Ship Engineering Co., Ltd. and are expected to be delivered in 2025 and 2026. This is the first time a Japanese shipping company has ordered LNG-powered VLCCs, and Dalian Cosco KHI Ship Engineering Co., Ltd. will become the second shipyard in China to build dual-fuel VLCCs with this order.

These two VLCCs will be approximately 339.5 meters long, 60 meters wide, and have a deadweight tonnage of approximately 309,000 tons, meeting the requirements of the third phase of the Energy Efficiency Design Index (EEDI). The vessels are equipped with dual-fuel main engines capable of using LNG and low-sulfur fuel oil. Compared to traditional powered vessels, when using LNG fuel, they can reduce carbon dioxide emissions by approximately 25-30%, sulfur oxide emissions by approximately 100%, and nitrogen oxide emissions by approximately 85%.

It is reported that these are the world's largest LNG-powered tankers, and this is the first time Dalian Cosco KHI Ship Engineering Co., Ltd. has received an order for LNG-powered VLCCs. According to International Ship Network, there are currently only three LNG-powered VLCCs in operation globally, all delivered in the first half of this year. The first was the 318,000-deadweight-ton "Yuan Ruiyang" built by China State Shipbuilding Corporation for COSCO SHIPPING Energy. The other two are the 300,000-deadweight-ton "Eagle Valence" and "Eagle Vallery," built by Samsung Heavy Industries for Malaysia's AET Tankers.

In addition, according to Clarksons data, of the current global VLCC order backlog, 18 are LNG-powered vessels, all built by South Korean shipbuilders, including four by Samsung Heavy Industries and 14 by Daewoo Shipbuilding & Marine Engineering.

Mitsui O.S.K. Lines' order is also the first VLCC order globally in over a year. Clarksons data shows that the previous newbuilding order in the VLCC sector dates back to June 2021, when Belgian shipowner Euronav ordered a 300,000-deadweight-ton VLCC from Hyundai Samho Heavy Industries. Since then, due to persistently weak VLCC freight rates and soaring newbuilding prices, there have been no new orders in this vessel type sector.

Kazuhiro Takahashi, Executive Director of Mitsui O.S.K. Lines, said: "Through communication with domestic and international clients, we increasingly feel the demand for LNG as a next-generation VLCC fuel. Because it is the (fossil fuel) oil industry, it is necessary to reduce greenhouse gas emissions. We hope to contribute to the maritime transport sector. From the current situation, LNG-powered crude oil tankers are a realistic option."

Takahashi pointed out: "In addition to the tight capacity of shipyards for large vessels, the International Maritime Organization (IMO) is discussing carbon taxes. We believe that now is the time to place an order to maximize environmental benefits."

Mitsui O.S.K. Lines did not disclose the price of the new vessels. Typically, the construction cost of LNG-powered vessels is 15% to 20% higher than that of traditional vessels. According to the latest data from Clarksons, although there are no new orders, the price of VLCCs has been rising this year, and the current price per vessel has reached US$120 million, a record high.

Takahashi frankly admitted that the price of the latest order is "not low," but considering the carbon tax and the relative competitiveness of LNG prices, Mitsui O.S.K. Lines believes that the price reflecting the additional costs can also meet customer needs.

Order for four bulk carriers from Beihai Shipbuilding; MOL will build another 68 LNG-powered vessels.

On August 25, Mitsui O.S.K. Lines also signed a contract with Qingdao Beihai Shipbuilding Co., Ltd. for four 210,000-deadweight-ton LNG-powered Newcastlemax bulk carriers, which are expected to be delivered in 2025 and 2026.

It is introduced that this type of vessel is a new generation of "green and environmentally friendly" vessel independently researched and designed by Qingdao Beihai Shipbuilding Co., Ltd. The vessel has an overall length of 300 meters, a molded breadth of 50 meters, a design draft of 18.4 meters, a design draft speed of 14 knots, and is equipped with an LNG dual-fuel propulsion system. It meets the IMO TIER III emission standards and EEDI Phase III requirements. Through comprehensive optimization of the vessel design, the vessel has better fuel and gas economy. The EEDI is approximately 44% lower than the baseline, SOx emissions are reduced by more than 90%, and NOx emissions are reduced by more than 20%. In gas mode, it can meet the requirements of two round trips on the China-Australia route and a round trip on the China-Brazil route. It is a modern green and environmentally friendly Capesize bulk carrier that combines energy saving, environmental protection, and high efficiency.

This is the first time Mitsui O.S.K. Lines has placed an order with Qingdao Beihai Shipbuilding Co., Ltd. Toshiyuki Shinota, Executive Director of Mitsui O.S.K. Lines, said that this decision was made after a comprehensive assessment, including the possibility of exchange rates in the first half of 2025.

The 210,000-deadweight-ton Newcastlemax is currently the world's largest LNG-powered bulk carrier. According to Clarksons data, there are currently 29 Newcastlemax LNG-powered vessels under construction worldwide, including three built by Qingdao Beihai Shipbuilding for South Korea's H-Line Shipping, which are expected to be delivered and put into operation in 2023.

Mitsui O.S.K. Lines is one of Japan's three major shipping companies. Established in 1884, it has maintained a leading position in the Japanese and global shipping industry for over 130 years. Against the backdrop of global carbon peaking and carbon neutrality, Mitsui O.S.K. Lines, as a shipping giant, has long been committed to promoting the green and environmentally friendly transformation of its fleet and released its "Environmental Vision 2.1" plan last year, setting a strategy for mass-producing clean alternative energy vessels.

With the latest order of four bulk carriers and two VLCCs, Mitsui O.S.K. Lines currently owns 22 LNG-powered vessels, including 16 ocean-going vessels (six bulk carriers, eight car carriers, two VLCCs) and six inland vessels (one tugboat, four ferries, one cargo vessel). One tugboat and one inland cargo vessel are already in operation, while the rest are under construction.

It is worth mentioning that the latest order marks the first time Mitsui O.S.K. Lines has ordered LNG-powered vessels from a Chinese shipyard. Apart from these six vessels, the other 16 LNG-powered vessels of Mitsui O.S.K. Lines were all built by Japanese shipyards.

According to Mitsui O.S.K. Lines' goal of having a fleet of 90 LNG-powered vessels by 2030, the company will order another 68 LNG-powered vessels in the future.

According to Mitsui O.S.K. Lines' plan, the company will focus on LNG-powered vessels in the 2020s and will deploy 90 LNG-powered vessels by 2030, with a total investment estimated at 700 billion yen (approximately 35.145 billion yuan). This means that Mitsui O.S.K. Lines will need to order another 68 LNG-powered vessels in the future.
 
MOL considers LNG fuel as an "immediately feasible greenhouse gas reduction measure." In the future, the company will also use synthetic methane produced from renewable energy to replace LNG, further reducing greenhouse gas emissions. At the same time, MOL will expand the application of ammonia and hydrogen fuels, aiming for zero greenhouse gas emissions by 2050.