A series of large LNG carrier newbuilding projects is enabling Chinese shipyards to build a track record with this ship type.
Chinese yards are entering this demanding market, as the energy transition and the Ukraine crisis have led to a huge increase in demand for large LNG carriers that the traditional yards cannot satisfy alone.
Driven by the strong global demand for LNG as a clean-burning energy source, China’s shipbuilders are expanding into this high-tech segment.
Chinese shipping firms like Cosco Shipping and China Merchants, Chinese national oil and gas companies including the state-owned CNOOC, Sinopec and CNPC, and the privately owned ENN and China Gas, are expected to grow their LNG portfolio to realize the energy security strategy.
Jin James Huang, regional strategic business development director at DNV, noted: “A significant number of long-term Chinese LNG contracts, based on a free on board (FOB) delivery arrangement, with various Chinese national oil companies, traders, and shipping firms, have stimulated LNG ship orders in China, especially due to the demand for US FOB cargoes.”
China has signed about 40 LNG term contracts, equivalent to around 54 million ton/year of LNG, since 2021. Nearly half of these were free on board (FOB) deliveries from the US, according to data from S&P Global Commodity Insights.
The leading shipbuilding group dominating China’s LNG newbuild orders is China State Shipbuilding Corp, or CSSC, whose order book stood at around 60 ships at the end of August 2023, as class society DNV reports.
Norbert Kray, regional manager for maritime Greater China at DNV, said: “In the smaller gas carrier segment, we have traditionally been quite strong, leading the market over the last 20 years.”
“We have given vigorous support to the Chinese shipyards; it was a very international market, with owners often coming from Germany and Nordic countries. Now we have entered the new large LNG carrier segment in the 175,000-cubic-metre range as well.”
The class society DNV claims that it is the only class so far to have LNG ship orders in all three CSSC yards, and a leading share of the orders under DNV class are with Chinese national oil companies, traders and shipowners.
As it is reported by DNV, the first was from Chinese gas cargo owner and charterer CNOOC and a consortium of shipowners ordering three 174,000-cubic-metre LNG carriers from Hudong–Zhonghua.
ENN, one of the largest clean energy distributors in China, later ordered three LNG ships together with joint owners MOL and COSCO, and K Line together with China Merchants Energy Shipping (CMES) ordered four large vessels of the same type, which amounts to ten ships at Hudong–Zhonghua, as DNV highlights.
DSIC will also build a 175,000-cubic-metre LNG carrier for CMES, and just recently on 31 August 2023, Cosco Shipping and Sinopec contracted three 175,000-cubic-metre LNG carriers at DSIC, all to DNV class.
Øyvind Pettersen, head of DNV China technology center, added: “We see a bright future for Chinese-built LNG carriers, and DNV is well-positioned to support this market.
DNV is supporting Jiangnan with all their LNG vessels to date, including two 175,000-cubic-metre LNG carriers ordered by Shandong Shipping, with Sinopec as charterer and cargo owner, in addition to the six ships of the same type by the foreign owner Abu Dhabi National Oil Company.
“We also work closely with our experts from our established Gas Carrier Excellence Center in Norway and Greece to incorporate all of our know-how. This has given us high credibility, both on-site and in approvals,” Øyvind Pettersen added.
