Over 40 billion! Hudong-Zhonghua secures the world's largest shipbuilding order

The final order for 18 of the world's largest LNG carriers in Qatar's "100-ship plan" has finally been placed. This 40 billion yuan order was won by Hudong-Zhonghua, setting a new record for the largest single shipbuilding order in the world. With this, the total number of newly built LNG carriers in the "100-ship plan" has reached 122.

18 271,000 cubic meter LNG carriers! Hudong-Zhonghua secures the world's largest single shipbuilding order.

On April 29, China Shipbuilding Group Co., Ltd. and QatarEnergy held a signing ceremony for the construction project of 18 of the world's largest 271,000 cubic meter Q-Max liquefied natural gas (LNG) carriers. This is not only the largest LNG carrier order ever undertaken by the Chinese shipbuilding industry, but also sets a record for the largest single shipbuilding order globally, and will have a profound impact on the global LNG industry development.

The signing ceremony was attended by leaders and guests including Shan Zhongde, Vice Minister of Industry and Information Technology; Lü Jian, Ambassador of the Department of West Asia and North Africa of the Ministry of Foreign Affairs; Wen Gang, Chairman of China Shipbuilding Group, and Sheng Jigan, Vice General Manager; Saad Sherida Al-Kaabi, Minister of State for Energy Affairs, President and CEO of QatarEnergy; Khalid Al-Seni, CEO of Gas at QatarEnergy; and Jassim Al-Marzouqi, Executive Vice President of Commerce and Business Development at QatarEnergy.

Saad Sherida Al-Kaabi, Minister of State for Energy Affairs, President and CEO of QatarEnergy; Chen Jianliang, Chairman of the company; and Li Hongtao, Chairman of CSSC Trading jointly signed the construction contract.

In his speech, Wen Gang stated that in recent years, QatarEnergy has vigorously implemented natural gas expansion plans and LNG carrier construction plans, rapidly improving its natural gas production and export capabilities, and playing an important leading and driving role in the accelerated development of global clean energy. China Shipbuilding Group is a leading force in the global shipbuilding industry and a firm practitioner of the Belt and Road Initiative. Through years of efforts, it has achieved independent design and construction of large LNG carriers, and its voice in the global shipbuilding market is continuously increasing. For many years, China Shipbuilding Group and QatarEnergy have established and maintained a good cooperative relationship, working together to promote the green and low-carbon transformation and development of the energy industry. This time, the two sides have joined hands again. China Shipbuilding Group will concentrate its superior resources, carefully organize production, strengthen scientific management, and strive to create industry-leading projects and benchmark projects, ensuring on-time and high-quality delivery, providing strong support for QatarEnergy's accelerated expansion and transformation development, and creating a new model and making new contributions to economic cooperation between China and Qatar.

In his speech, Saad Sherida Al-Kaabi stated that the signing of the construction contract for 18 of the world's largest 271,000 cubic meter LNG carriers between QatarEnergy and China Shipbuilding Group has created a record for the highest amount of a single new ship order, representing a historic breakthrough. These ships will support QatarEnergy's increased production capacity in the North Field and meet the long-term renewal needs of the fleet. He hopes that QatarEnergy and China Shipbuilding Group will further deepen pragmatic cooperation in the future and jointly contribute to the sustainable development of the industry.

Early this year, reports indicated that as part of the second phase of the "100-ship plan," QatarEnergy had already placed an order with Hudong-Zhonghua for the first batch of 8 271,000 cubic meter Q-Max LNG carriers, with plans for delivery between 2028 and 2029. Later, sources revealed that QatarEnergy intended to increase the number of Q-Max carriers to 18, higher than the previous market expectation of 16, and that Hudong-Zhonghua would handle all 18 orders.

It is reported that each of these Q-Max carriers is estimated to cost US$305-310 million, with a total value of US$5.58 billion (approximately RMB 40.437 billion) for 18 vessels.

The shipowners for these 18 new vessels from QatarEnergy have been determined. Ten will be built for the Qatari state-owned natural gas transportation company Nakilat, three for Shandong Marine Energy (Singapore), two for China LNG Transportation (Holding) Co., Ltd. (CLNG), a joint venture between China Merchants Group and COSCO SHIPPING Group, and three more will be built through a collaboration between COSCO SHIPPING Group and MOL. QatarEnergy will sign long-term charter contracts with the relevant shipowners.

These Q-Max carriers will be independently designed and built by Hudong-Zhonghua Shipbuilding (Group) Co., Ltd., a subsidiary of China Shipbuilding Group. Last September, Hudong-Zhonghua's 271,000 cubic meter ultra-large LNG carrier design received Approval in Principle (AIP) certificates from the four major international classification societies: American Bureau of Shipping (ABS), Lloyd's Register (LR), DNV, and Bureau Veritas (BV). This is the largest LNG carrier design developed globally 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 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 features a multi-objective optimized double-stern fin hull form for excellent speed. The vessel is equipped with the latest generation of cargo containment systems, resulting in lower evaporation rates and a 9.9% reduction in cargo transportation energy consumption per ton-mile compared to 174,000 cubic meter LNG carriers. The cargo tanks use enhanced insulation modules, and are equipped with a real-time sloshing monitoring system, hull stress monitoring, and anti-collision systems, providing multiple safeguards and enhanced safety and reliability. It is equipped with a powerful reliquefaction system and a shaft generator reverse thrust system for flexible operation. Furthermore, its carbon intensity indicator (CII) is 23% lower than that of 174,000 cubic meter LNG carriers, allowing for flexible matching with various operating ranges on different routes. Its diversified optimized draft and loading design allows access to over 70 terminals on all continents, covering major mainstream routes, and boasts excellent ship-shore compatibility.

Hudong-Zhonghua pointed out that the successful acquisition of the order for 18 of the world's largest 271,000 cubic meter LNG carriers in the "100-ship plan" is a milestone event for China's shipbuilding in the field of ultra-large LNG carrier construction, an important reflection of the increasing international influence of China Shipbuilding Group, and marks the company's LNG carrier research, development, and construction leaping from large-scale to ultra-large-scale, with its high-end ship research and development capabilities reaching world-leading levels.

Hudong-Zhonghua has been deeply involved in the LNG field for 27 years, with its products covering the entire range from nearshore to ocean-going, inland to inland river, and small to ultra-large scales. It has delivered more than 40 LNG storage and transportation equipment, demonstrating the company's strong strength in the field of high-end marine equipment.

Including the latest 18 orders, Hudong-Zhonghua has undertaken a total of 30 LNG carrier orders for QatarEnergy's "100-ship plan." This number far exceeds the number of berths reserved by QatarEnergy in the 2020 agreement. According to foreign media reports at the time, based on the agreement amount, Qatar reserved berths for the construction of 16 174,000 cubic meter LNG carriers at Hudong-Zhonghua.

Currently, 8 of the 12 174,000 cubic meter LNG carriers being built by Hudong-Zhonghua have commenced construction, with 3 undergoing dockside testing. The highly anticipated first vessel is scheduled for sea trials in May and delivery in August. Hudong-Zhonghua will fully utilize digital and intelligent technologies to build high-quality LNG carriers for the "Hundred Ships Plan," actively implementing the Belt and Road Initiative and making greater contributions to deepening friendship between China and Qatar.

To meet the growing demand for LNG carrier construction, Hudong-Zhonghua has been significantly expanding its production capacity to secure more new ship orders. Hudong-Zhonghua launched the Phase II project of the Changxing Shipbuilding Base in 2022. This project bears the responsibility of doubling Hudong-Zhonghua's LNG production capacity and is scheduled for completion early this year. Upon completion, Hudong-Zhonghua's LNG carrier production capacity will significantly increase from the previous 5-6 vessels per year to 10-12 vessels.

Excluding the latest order of 18 vessels, Clarksons' data shows that Hudong-Zhonghua currently holds a total of 41 LNG carrier orders, ranking first in China and fourth globally, after South Korea's Hanwha Ocean (77 vessels), Samsung Heavy Industries (74 vessels), and Hyundai Heavy Industries Ulsan shipyard (68 vessels).

A total of 122 vessels: Qatar places large orders with four shipyards in China and South Korea through the "Hundred Ships Plan".

With the new order from Hudong-Zhonghua, the number of orders in the second phase of QatarEnergy's "Hundred Ships Plan" will reach 62 vessels. This includes 44 174,000 cubic meter standard LNG carriers from the three major South Korean shipbuilders and 18 271,000 cubic meter LNG carriers, the world's largest, from Hudong-Zhonghua, exceeding the 60 vessels in the first phase of 2022.

It is understood that Qatar is the world's largest LNG producer and exporter. Qatar is currently vigorously promoting the expansion project of the North Field, planning to increase 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 "Hundred Ships Plan" and signing agreements with four shipyards in China and South Korea, with an initial plan to order a total of 151 LNG carriers in three phases.

In 2020, QatarEnergy successively signed LNG carrier construction project agreements with Hudong-Zhonghua and the three major South Korean shipbuilders. According to the plan at that time, the three major South Korean shipbuilders would each build 45 LNG carriers, totaling 135; Hudong-Zhonghua would build 16. In 2022, a total of 66 orders in the first phase of the "Hundred Ships Plan" took effect. The three major South Korean shipbuilders won a total of 54 orders, including 17 from HD Hyundai Heavy Industries, 18 from Samsung Heavy Industries, and 19 from Hanwha Ocean. In addition, Hudong-Zhonghua received 12 orders.

In October 2023, the second phase of the "Hundred Ships Plan" was launched, with HD Hyundai Heavy Industries receiving the first batch of 17 LNG carrier orders in the second phase. In February this year, Samsung Heavy Industries received an order for 15 174,000 cubic meter LNG carriers. In March, Hanwha Ocean (formerly Daewoo Shipbuilding) officially signed a contract for 12 174,000 cubic meter LNG carriers, marking the completion of all 44 LNG carrier orders from South Korean shipbuilders in the second phase of the "Hundred Ships Plan".

After reaching shipbuilding agreements with the shipyards, QatarEnergy successively signed charter contracts with multiple shipowners earlier this year for the 44 standard LNG carriers from South Korean shipbuilders. Among them, Qatari LNG carrier operator Nakilat first obtained charter contracts for as many as 25 vessels, including all 17 built by Hyundai Heavy Industries and 8 built by Hanwha Ocean.

In March this year, QatarEnergy signed four lease agreements with CMES LNG Carrier Investment, a subsidiary of China Merchants Energy Shipping, Shandong Marine Energy (Singapore), Japan's Kawasaki Kisen Kaisha, South Korea's Hyundai Glovis, and Malaysia's MISC, involving 15 LNG carrier orders from Samsung Heavy Industries and 4 from Hanwha Ocean in Qatar.

According to the contract, CMES LNG Carrier Investment and Shandong Marine Energy (Singapore) will each operate 6 LNG carriers, and MISC will operate another 3. All 15 vessels are built by Samsung Heavy Industries. The 4 vessels built by Hanwha Ocean will be operated by a joint venture between Kawasaki Kisen Kaisha and Hyundai Glovis.

With the signing of the final order with Hudong-Zhonghua, QatarEnergy has ordered 122 LNG carriers through the "Hundred Ships Plan." It is worth mentioning that 99 LNG carriers in the "Hundred Ships Plan" use engines licensed by WinGD, a subsidiary of China Shipbuilding Group, further demonstrating the continuous deepening of China Shipbuilding Group's construction of the LNG carrier industry and supply chains. This also propels the strategic partnership between China Shipbuilding Group and QatarEnergy to a new level, promoting broader cooperation in the energy field between China and Qatar, and building a long-term and stable energy cooperation relationship.

Qatar is very optimistic about the future LNG demand outlook for the next few decades. In February this year, QatarEnergy announced a new expansion project for the North Field—North Field West—planning to increase Qatar's LNG production capacity by nearly 85% by the end of 2030, increasing production from 77 million tons to 142 million tons per year.

Currently, QatarEnergy has signed supply agreements with several multinational companies, including TotalEnergies, Shell, Eni, Sinopec, PetroChina, ExxonMobil, and ConocoPhillips.