More details of Qatar’s LNG carrier project worth about 23 trillion won are expected to come out in October. As a result, competition to win a bigger share of the project is expected to heat up among Korean and Chinese shipbuilders.
Qatar’s state-run oil company, Qatar Petroleum (QP), are expected to place LNG carrier orders with four shipbuilders – the three Korean dockyards of Korea Shipbuilding & Offshore Engineering, Samsung Heavy Industries and Daewoo Shipbuilding & Marine Engineering, and Hudong-Zhonghua Shipbuilding of China. The first batch of the orders is known to be around 20 vessels. Industry experts predict that orders could be either evenly distributed among the four shipbuilders, or unevenly, with some shipbuilders getting a relatively smaller number of ships.
QP signed a contract with Hudong-Zhonghua Shipbuilding in April 2020 to secure LNG carrier building slots. It did the same with the three Korean shipbuilders in June of the same year. Through these contracts, QP has secured a significant portion of the shipbuilders’ LNG carrier construction spaces by 2027. The aggregate value of the contracts is known to be about 70 billion riyals (about 23.6 trillion won). Although the exact size of the slot contracts have been kept under wraps in accordance with the principle of mutual confidentiality, industry watchers estimate that the Korean shipbuilding trio have won orders to build 135 vessels.
Qatar, the world’s largest LNG producer, has decided to expand its annual LNG production from the current 77 million tons to 126 million tons by 2027. Qatar will need large carriers to transport LNG.
If orders for the Qatar project are placed in October as expected, the shipbuilders’ profitability improvement is expected to accelerate. Vessel prices are on a steady rise. The average price of a 174,000-cubic-meter LNG carrier has recently reached US$200 million, said Clarkson Research, a shipbuilding and shipping market analysis agency. It is the first time in five years that the price of LNG carriers has surpassed US$200 million per ship.
The three Korean shipbuilding companies have secured two years’ worth of work. Their order backlog is expected to increase to five years of work thanks to the Qatar project.
Source: Business Korea