Two shipyards receive orders for 9 LNG carriers! Sinopec launches LNG ship construction project

The booming LNG market continues. Following China National Petroleum Corporation and China National Offshore Oil Corporation, Sinopec is about to launch its LNG ship construction plan. Two Chinese shipyards are expected to share the order for nine large LNG carriers from this state-owned energy giant, with a total value exceeding 15 billion yuan.

3+2 vessels! COSCO SHIPPING will cooperate with MOL to place an order with Dalian Shipbuilding Industry Company

According to TradeWinds, COSCO LNG Investment Co., Ltd. (CSLNG) and Japan's Mitsui O.S.K. Lines will cooperate to order 3+2 175,000 cubic meter LNG carriers from Dalian Shipbuilding Industry Company, which will be chartered by Sinopec. The new vessels will adopt GTT's Mark III Flex membrane containment system. Each vessel will cost US\$230 million, and the total value of all five vessels will reach US\$1.15 billion (approximately RMB 8.322 billion) after the optional order is confirmed and takes effect.

This will be the second LNG carrier order for Dalian Shipbuilding Industry Company after the contract for four 175,000 cubic meter LNG carriers from COSCO SHIPPING.

For COSCO SHIPPING and MOL, this is the second China LNG carrier leasing project the two partners have jointly participated in this year. In January this year, COSCO SHIPPING and MOL formed a consortium and signed a six 174,000 cubic meter LNG carrier time charter contract with CNOOC, investing in the construction of six LNG carriers for the "CNOOC Medium and Long-term FOB Resource Matching LNG Transportation Project (Phase I)" and signing a construction contract with Hudong-Zhonghua Shipbuilding.

Earlier this year, it was reported that Sinopec was bidding for the construction of nine 175,000 cubic meter LNG carriers, which will be used to transport LNG imported from the United States. In November last year, Sinopec and Venture Global LNG of the United States jointly signed a 20-year, 4 million tons/year long-term LNG sales and purchase agreement. Approximately 2.8 million tons of LNG per year will be traded on an FOB (Free On Board) basis, with the buyer responsible for arranging the vessel to transport the goods. Therefore, Sinopec needs 8 to 10 LNG carriers to transport the goods.
Sinopec is no stranger to COSCO SHIPPING. As early as 2013, Shanghai LNG under COSCO SHIPPING Energy, Sinopec Guangdong Petrochemical, and MOL formed a consortium to jointly order six LNG carriers from Hudong-Zhonghua Shipbuilding as a supporting transportation project for Sinopec's natural gas trade project with Australia (APLNG). This series of vessels were delivered in May 2018, taking five years.

After the project was put into operation, COSCO SHIPPING Energy and United Petrochemical, a subsidiary of Sinopec Group, actively cooperated and worked together to effectively ensure the stable operation of the project, with an utilization efficiency exceeding 90%, higher than the industry average of 80%, and fully cooperating to complete the annual winter supply tasks. In March this year, COSCO SHIPPING Group, Sinopec Group, and China Shipbuilding Group held a video conference to discuss further deepening cooperation in the LNG transportation field and ensuring national energy transportation security.

2+2 vessels! Shandong Shipping makes its first foray into the LNG carrier market, placing an order with Jiangnan Shipyard

It is understood that in addition to the five vessels from COSCO SHIPPING and MOL, Sinopec will lease up to four more LNG carriers. It is said that this order will be placed by Shandong Shipping with Jiangnan Shipyard.

Previously, China Shipbuilding announced at the end of October that its subsidiary, Jiangnan Shipyard, had signed a letter of intent with a Singaporean shipowner for the construction of two 175,000 cubic meter LNG carriers, with a total value of approximately US\$460 million, and the expected delivery date is before the end of July 2027. Although the specific shipowner information was not disclosed, sources said that this order came from Shandong Shipping, and the contract also includes an additional order for two optional vessels.

This is the first time Shandong Shipping has ordered large LNG carriers. Shandong Shipping is a large state-owned enterprise initiated and established by Shandong Marine Group Co., Ltd. as its controlling shareholder. It focuses on the marine transportation of bulk commodities such as minerals, grains, energy, chemicals, and general cargo, with routes covering major ports worldwide.

Shandong Shipping's "Shandong Juniper"
 

It is also reported that Shandong Shipping recently leased a 145,000 cubic meter LNG carrier, "Methane Heather Sally" (built in 2007), through its subsidiary, Shandong Marine Energy (Singapore) Co., Ltd. This vessel was originally owned by Gaslog Partners and signed a sale and leaseback agreement with China Huaxia Financial Leasing in October for US\$50 million. Gaslog Partners stated at the time that it had signed a three-year charter contract for the "Methane Heather Sally" with an unnamed Southeast Asian company.

Similar to Shandong Shipping, Jiangnan Shipyard and Dalian Shipbuilding Industry Company are also "new" shipyards that have just entered the large LNG carrier construction market this year. In March this year, Jiangnan Shipyard signed its first contract for the construction of two 175,000 cubic meter LNG carriers with ADNOC L&S, a subsidiary of ADNOC, becoming the first shipyard in China to undertake the construction of large-scale MARK III membrane-type LNG carriers. This is also China's first order for large LNG carriers in the purely international market, pioneering direct cooperation between Chinese shipbuilders and international leading oil and gas companies in the construction of large LNG carriers.

In March this year, Dalian Shipbuilding Industry Company signed a contract with COSCO SHIPPING for the construction of 2+2 175,000 cubic meter large LNG carriers, becoming the third shipyard in China to receive orders for large LNG carriers after Hudong-Zhonghua Shipbuilding and Jiangnan Shipyard.

Since the beginning of this year, orders for LNG carriers in the new shipbuilding market have surged. Data from Clarksons shows that the global order volume for new LNG carriers has reached 158 vessels, exceeding last year's 86 vessels and setting a historical record. Among them, Chinese shipbuilders have already received as many as 49 LNG carrier orders this year, far exceeding the 14 LNG carrier orders received in China last year.