Abandoning the first generation of ships? South Korea's second-generation domestically produced LNG cargo tank vessel launched

After three years of repairs on an LNG carrier using the first-generation domestically produced cargo tank technology, it remained unable to resume operations. Despite this, the South Korean shipbuilding industry has not given up on the domestic production of LNG cargo tanks. To break the technological monopoly of France's GTT company, South Korea has begun to accelerate the practical application of the second-generation Korean-type LNG cargo tank technology, "KC-2".

The second-generation Korean-type LNG cargo tank, "KC-2B," a 7500-cubic-meter LNG bunkering vessel, launched for its first real-world application.

According to recent reports from South Korean media, in early December, a 7500-cubic-meter LNG bunkering vessel built by Hyundai Heavy Industries' Ulsan shipyard was successfully launched. This vessel utilizes "KC-2B," one of the technologies under the "KC-2" system. The vessel has now entered its final stages of completion and is expected to be delivered to the ship owner by the end of February next year. As of now, no technical abnormalities have been detected in the vessel's LNG cargo tanks.

This 7500-cubic-meter LNG bunkering vessel, built by Hyundai Heavy Industries and employing "KC-2B" technology, is specifically designed for supplying fuel to LNG-powered ships.

It is understood that "KC-2" is the latest Korean-type cargo tank technology developed to replace the membrane-type LNG cargo tank technology monopolized by France's GTT company. Compared to "KC-1," it boasts improved insulation performance, easier installation, and a lower boil-off rate (BOR), further enhancing its economic efficiency.

The South Korean industry anticipates that if this LNG bunkering vessel using "KC-2B" technology can achieve stable commercial operation, it will mark the successful development and application of Korean-type LNG cargo tank technology. This is expected to save the South Korean shipbuilding industry a significant amount in patent fees paid to GTT.

It is understood that cargo tanks are core equipment for LNG carriers. Although South Korean shipbuilders currently handle the vast majority of global LNG carrier orders, the patent for LNG carrier cargo tank technology remains in the hands of France's GTT company. For each LNG carrier built, South Korean shipbuilders pay GTT patent fees equivalent to 5% of the ship's price. With the record-high price of a single LNG carrier in South Korea currently reaching $240 million, GTT's patent fees have increased to a staggering $12 million. For South Korea's three major shipbuilders, which have suffered massive losses for many years, developing domestic LNG cargo tank technology will undoubtedly significantly reduce costs and improve profitability.

Image of an LNG carrier using the KC-1 containment system
 

To quickly break free from GTT's monopoly and solve the "bottleneck" problem of LNG cargo tank technology, Korea Gas Corporation (KOGAS) and South Korea's three major shipbuilders jointly developed the "KC-1" LNG cargo tank over 10 years. This is the second LNG carrier membrane containment system to achieve commercialization after GTT's system. This type of cargo tank can maintain an LNG boil-off rate (BOR) of 0.07%, reaching the same level as GTT's Mark Ⅲ Flex containment system.

In 2018, the first two large LNG carriers equipped with "KC-1" LNG cargo tanks, built by Samsung Heavy Industries, were officially delivered to South Korea's SK Shipping. This marked the first time the system was used on an actual vessel. However, shortly after these two LNG carriers were put into operation, problems such as gas leakage at the connection points of the internal structure of the cargo tanks and icing on the outer walls of the tanks occurred. Samsung Heavy Industries then invested 19.7 billion won in repairs, but the same problems occurred again in May 2019, forcing the vessels to return to the shipyard for repairs, and they have yet to resume operation.

Following the failure of the "KC-1" technology, South Korea's three major shipbuilders, with the support of the government, are pushing ahead with the development of the second-generation domestic LNG cargo tank technology, "KC-2." With the continuous progress of the South Korean shipbuilding industry in domestic cargo tank technology and the industry's optimistic outlook for the LNG bunkering vessel market, the support from the South Korean government is also increasing. Of the total project cost of 49.8 billion won (approximately $39 million) for the development of "KC-2B" technology, the government's support amounts to 15 billion won (approximately $11.76 million).

Three years of repairs and still not up to standard? LNG carrier loading tests hampered by the use of "KC-1" LNG cargo tanks.

It is reported that because Korea Gas Corporation refused to allow LNG loading tests on LNG carriers equipped with South Korea's domestically produced "KC-1" LNG cargo tanks, the return to service of two LNG carriers that have been under repair at Samsung Heavy Industries for more than three years has been delayed, potentially causing continued significant economic losses for the ship owner and shipyard.

Samsung Heavy Industries revealed on November 30 last year that the two LNG carriers equipped with "KC-1" LNG cargo tanks, the "SK Serenity" and "SK Spica," were originally scheduled to undergo a full loading test of LNG in the East Sea of Korea after loading at the Samcheok LNG receiving terminal on November 23. However, this was not possible due to Korea Gas Corporation, the project implementer, refusing entry to the port.

According to International Ship Network, these two LNG carriers have been undergoing final checks on the conditions and procedures for the LNG full loading test, a process involving Korea Gas Corporation, KC LNG Tech (a subsidiary of Korea Gas Corporation responsible for the development of "KC-1" LNG cargo tank technology), the ship owner SK Shipping, the shipbuilder Samsung Heavy Industries, and classification societies KR (Korea Register) and ABS (American Bureau of Shipping), in order to resume operations.

However, Korea Gas Corporation sent a document on November 16, a week before the scheduled loading, refusing entry to the LNG receiving terminal for the two LNG carriers. The reason given was the incompleteness of documents related to "the repair results of the cold spot discovered during the third loading test" and "the analysis of the possibility of cold spot occurrence and the response plan in case a cold spot occurs during the loading test."