16 ships, all made in China? Qatar's "100-ship plan" places another large order

Entering 2024, the second phase of Qatar's "Hundred Ships Plan" orders is accelerating. Following the 15-ship order from Samsung Heavy Industries at the beginning of the month, the last of the three South Korean giants, Hanwha Ocean, will finalize an order for 12 174,000 cubic meter LNG carriers. Meanwhile, Hudong-Zhonghua, as the only Chinese shipyard involved, is expected to secure the entire order for 16 of the world's largest 270,000 cubic meter LNG carriers.


 

Another 8 Ships Ordered? QatarEnergy to Order More Q-Max LNG Carriers from Hudong-Zhonghua

According to TradeWinds, QatarEnergy is in a new round of negotiations with Hudong-Zhonghua, planning to order more of the world's largest Q-Max LNG carriers. Earlier this year, Hudong-Zhonghua received an initial order for 8 271,000 cubic meter Q-Max LNG carriers from QatarEnergy, with delivery scheduled between 2028 and 2029.

This is part of the second phase of QatarEnergy's "Hundred Ships Plan". It is understood that QatarEnergy once requested quotations from shipyards for up to 16 Q-Max ultra-large LNG carriers. However, it turned out that the three major South Korean shipyards were not interested in building Q-Max type vessels, mainly because they have already secured more than three years' worth of work and the LNG carrier construction slots reserved for Qatar are based on 170,000 cubic meter standard vessels. Switching to Q-Max LNG carriers would occupy limited dock space.

It is understood that each of Qatar's Q-Max vessels costs over US$300 million. If Hudong-Zhonghua secures all 16 orders, the total transaction value will reach US$4.8 billion (approximately RMB 34.389 billion), which would undoubtedly set a new record for LNG carrier orders in the Chinese shipbuilding industry.

Qatar's Q-Max vessels will adopt the 271,000 cubic meter ultra-large LNG carrier design developed by Hudong-Zhonghua. Last September, this design received Approval in Principle (AIP) certificates from the four major international classification societies: ABS, LR, DNV, and BV. This is the largest LNG carrier design in the world to date.

The vessel has an overall length of 344 meters, a breadth of 53.6 meters, a depth of 27.2 meters, and a design draft of 12.0 meters. It uses a dual-fuel slow-speed engine propulsion system and a NO96 Super+ containment system. With a five-hold design, it boasts a compact size and the world's largest cargo capacity of 271,000 cubic meters, representing a 57% increase in carrying capacity compared to conventional 174,000 cubic meter large LNG carriers. It is equipped with the latest generation of cargo containment systems, resulting in lower boil-off rates. The energy consumption per ton-mile of cargo is 9.9% lower than that of 174,000 cubic meter LNG carriers. Its diversified optimized draft and loading design allows access to over 70 terminals in major continents worldwide, covering major mainstream routes, and boasts excellent ship-shore compatibility.

According to International Ship Network, QatarEnergy initially signed an LNG carrier construction project agreement with Hudong-Zhonghua in 2020, worth RMB 20 billion, reserving dock space for its new shipbuilding needs. Subsequently, the construction contract for the first four vessels was signed in April 2022, ordered by Mitsui O.S.K. Lines. In the same year, Hudong-Zhonghua took over an additional three vessels of the same type from Mitsui O.S.K. Lines and signed a contract for five LNG carriers with a joint venture company formed by China LNG Shipping (Holdings) Co., Ltd. (CLNG), NYK, Kawasaki Kisen Kaisha, and MISC. These 12 LNG carriers constitute all of the orders in China for the first phase of Qatar's "Hundred Ships Plan", and are long-term leased by QatarEnergy.

In early December last year, Chen Jun, general manager of Hudong-Zhonghua, confirmed at the 2023 China International Maritime Exhibition Advanced Maritime Forum that the second phase of orders for Qatar's "Hundred Ships Plan" is expected to be announced "around the Spring Festival". Subsequently, in January this year, foreign media reported that QatarEnergy signed an order for 8 Q-Max LNG carriers with Hudong-Zhonghua.

To meet the growing demand for LNG carrier construction, Hudong-Zhonghua has been significantly expanding its capacity to secure more new ship orders. Hudong-Zhonghua launched the Phase II project of the Changxing Shipbuilding Base in 2022. This project undertakes Hudong-Zhonghua's LNG capacity doubling strategy and is scheduled to be completed at the beginning of this year. At that time, Hudong-Zhonghua's LNG carrier production capacity will be significantly increased from the previous 5-6 vessels per year to 10-12 vessels.

Clarksons' data shows that as of now, Hudong-Zhonghua has a total of 41 LNG carrier orders, second only to Samsung Heavy Industries (85 vessels), Hyundai Heavy Industries Ulsan shipyard (69 vessels), Hanwha Ocean (66 vessels), and Hyundai Mipo Dockyard (43 vessels), ranking first in China and fifth globally.

Qatar's "Hundred Ships Plan" Phase Two Orders Finalized; Hanwha Ocean to Receive 12 174,000 Cubic Meter LNG Carriers

In addition to the Q-Max vessel orders from Hudong-Zhonghua, it is understood that QatarEnergy will also finalize an order for at least 12 174,000 cubic meter LNG carriers with Hanwha Ocean (formerly Daewoo Shipbuilding) as part of the second phase of the "Hundred Ships Plan". The formal contract for Hanwha Ocean is expected to be signed next month.

Thus, the second phase orders of Qatar's "Hundred Ships Plan" have been largely determined. In October last year, HD Hyundai Heavy Industries received an order for 17 174,000 cubic meter LNG carriers in the second phase; in February this year, Samsung Heavy Industries received an order for 15 174,000 cubic meter LNG carriers. It is worth mentioning that the price per vessel for both shipyards is US$229 million, slightly lower than the previously expected US$240 million per vessel in the South Korean industry, and far lower than the current market price of approximately US$265 million for LNG carriers.

Sources say that the main point of contention in the delayed signing of orders between QatarEnergy and the three major South Korean shipyards was the price. In previous negotiations with Samsung Heavy Industries, Samsung Heavy Industries demanded that Qatar raise the price, citing a huge gap with the current market price. However, following a high-level ministerial meeting between Qatar and South Korea, Samsung Heavy Industries eventually agreed to sign an order for 15 new vessels at a price of US$229 million.

It is understood that when QatarEnergy and the three South Korean shipyards signed ship slot reservation agreements in 2020, the price per LNG carrier was set at US$190 million, the same as in 2019. Due to the soaring prices of raw materials, when the two sides signed the order for the first batch of Qatar's LNG project in 2020, the price per vessel had already risen to approximately US$215 million, a 13% increase over the original contract price. At that time, the price of newly built LNG carriers had already risen to the US$240 million range. Since then, LNG carrier prices have continued to rise, and as of now, the market price has risen to US$265 million.

Qatar is the world's largest LNG producer and exporter. Currently, Qatar is vigorously promoting the expansion project of the North Field, planning to increase its LNG production capacity from the current 77 million tons to 126 million tons annually after 2027. To meet the gas field expansion plan, QatarEnergy also needs to expand its LNG fleet, thus launching the "100-ship plan" and signing agreements with four shipbuilding companies in China and South Korea, with an initial plan to order a total of 151 LNG vessels in three phases.

In 2020, QatarEnergy signed LNG vessel construction memoranda of understanding (MOAs) with Hudong-Zhonghua and three major South Korean shipbuilders. According to the plan, the three major South Korean shipbuilders will each build 45 LNG vessels, totaling 135. In 2022, the first phase of the "100-ship plan," totaling 60 orders, came into effect. The three major South Korean shipbuilders won a total of 48 orders, including 17 from HD Hyundai Heavy Industries, 18 from Samsung Heavy Industries, and 13 from Hanwha Ocean (formerly Daewoo Shipbuilding & Marine Engineering), in addition to 12 from Hudong-Zhonghua.

Together with 44 vessels from the three major South Korean shipbuilders and at least 8 Q-Max type vessels from Hudong-Zhonghua in the second phase, the number of orders from QatarEnergy will reach 112.

As is customary, after reaching shipbuilding agreements with shipyards, QatarEnergy will then select shipowners to sign time charters for these newly built LNG vessels. Recently, QatarEnergy has selected Nakilat, a Qatari natural gas transportation giant, as the shipowner, owning and operating up to 25 new vessels from the second phase of the "100-ship plan." This is the first long-term charter agreement for the second phase.

Nakilat will own the 174,000 cubic meter LNG vessels built by QatarEnergy at South Korean shipyards and will lease these vessels to subsidiaries of QatarEnergy. However, QatarEnergy did not disclose which South Korean shipyards built these 25 vessels.

At the time, Saad Sherida Al-Kaabi, President and CEO of QatarEnergy, said: "QatarEnergy is firmly building its future LNG fleet, which is expected to exceed 100 vessels. We look forward to announcing the names of more winning shipowners in the near future."