LNG carrier orders and newbuilding deliveries were higher during the first half of 2018 than they have been for many years
In the two months to 30 June 2018 eight LNG carriers were ordered and seven delivered. This recent activity has boosted the tallies of LNG ships contracted in the first half of the year to 25 and vessels delivered to 30. Those are impressive totals when compared to industry performances in recent years.
In the whole of 2017 only 20 LNG carriers were ordered (just 10 in 2016). The level of new ship contracts in 2016 was the lowest since 2009, the year after the collapse of Lehman Brothers and the global financial meltdown.
Shipyards handed over a total of 24 conventional LNG carriers to their owners in 2017. That tally increases to 37 if four 27,500 m3 LNG/ethane carriers, three LNG bunker vessels (LNGBVs), four floating storage and regasification units (FSRUs) and the Shell and Exmar floating LNG production (FLNG) vessels are included.
In terms of newbuilding contracts in the first half of 2018, Daewoo Shipbuilding & Marine Engineering (DSME) outperformed its rivals, winning 11, or 44%, of the period’s LNGC orders. Hyundai Ulsan Heavy Industries (HHI), Hyundai Samho Heavy Industries (HSHI) and Samsung Heavy Industries (SHI) each secured four ships, while the only two LNGBVs booked during the semester went to Chinese yards.
Total and Mitsui OSK Lines placed their joint order for an 18,600 m3 LNGBV with the Hudong-Zhonghua yard in Shanghai while FueLNG, the Shell/Keppel initiative, nominated the Keppel Singmarine facility in Nantong to construct its 7,500 m3 LNGBV. On delivery in 2020 the two vessels are earmarked for ship fuelling duties in Rotterdam and Singapore, respectively, the world’s two busiest ship bunkering ports.
By propulsion system, MAN Energy Solutions’ M-type, electronically controlled, gas-injection (ME-GI) engines came out on top. Of the 25 first-half LNGC newbuilding orders, 13 will be powered by these dual-fuel two-stroke engines that rely on the supply of fuel gas at high pressure. All the DSME and two of the HHI ships will have ME-GI engines.
The Generation X dual-fuel (X-DF) engines developed by Winterthur Gas & Diesel (WinGD) have been chosen to power 10 of the newbuildings, including all the newly contracted SHI and HSHI ships. X-DF low-speed propulsion units are based on the Otto rather than the Diesel cycle, and do not require the feed of fuel gas at high pressure.
Regas vessels in the mix
Although there is currently a great deal of interest among would-be LNG importers for solutions based on the use of FSRUs, commitments are in the development phase and have yet to translate into widespread newbuilding orders.
Having said that that, one FSRU, Höegh LNG’s 170,000 m3 Hoegh Esperanza from HHI, was delivered during the first six months of 2018. At the same time two FSRUs were ordered, both in May 2018. Maran Gas specified a 174,000 m3 vessel at DSME while Turkiye Petroleum decided on a 180,000 m3 unit at HHI.
Designed for open, combined and closed-loop regasification operations, Hoegh Esperanza is Höegh LNG’s eighth FSRU. Hoegh Esperanza had been scheduled to enter into service as the Penco-Lirquén receiving facility, Chile’s third LNG import terminal, to supply an adjacent gas-fired power plant.
Unfortunately, the Penco-Lirquén permitting process has run into delays, due to issues with the project’s environmental approvals. Until these can be resolved, Hoegh Esperanza has been offered for service in the international market.
In early June 2018 CNOOC Gas & Power Trading and Marketing (CNOOC) agreed with Höegh LNG to take Hoegh Esperanza on a three-year charter, with a one-year extension option. Under the agreement, CNOOC will be able to utilise Hoegh Esperanza as an FSRU at its Tianjin terminal in northern China at certain times of the year and as a conventional LNGC at others.
Ordered in May 2018 and set for early 2021 delivery, the Maran Gas FSRU is the second speculatively contracted regas vessel in the Greek owner’s current nine-ship LNG orderbook. The first Maran Gas FSRU is due to be completed in spring 2020.
There is no shortage of proposed FSRU-based LNG import projects, for which Maran Gas will no doubt be among the competing vessel owners making bids. The latest countries to express interest in FSRU solutions are Australia, Lebanon and Sudan.
The Turkiye Petroleum FSRU will go on charter to Botas, Turkey’s state oil and gas company, on completion in 2020 to meet the country’s LNG import needs. Botas currently has Mitsui OSK Lines’ 263,000 m3 MOL FSRU Challenger on short-term charter, with the ship positioned at the Mediterranean port city of Dörtyol in eastern Turkey near Iskenderun.
MOL FSRU Challenger is being lined up for employment as an FSRU in Hong Kong when it comes off charter with Botas in 2020, and the regas vessel contracted by Turkiye Petroleum is a replacement candidate for Dörtyol. Botas is also considering the use of an FSRU in the Gulf of Saros on the northern coastline of the Gallipoli Peninsula.
Slew of deliveries
Daewoo was also the busiest yard in terms of LNGC completions during the first half of 2018. The Korean shipbuilder delivered 10 of a total of 30 ship commissionings, while compatriot yards Samsung and Hyundai handed over five each.
Japanese shipbuilders completed six of the newbuildings, with Mitsubishi Heavy Industries (MHI), Kawasaki Heavy Industries (KHI) and Imabari all accounting for two each. The delivery roster was completed by three vessels from Hudong-Zhonghua yard in China and one from Neptun Werft’s Rostock facility in Germany.
The vessel built by the Neptun yard is the 18,000 m3 Coral EnergICE, the only coastal LNG carrier delivered during the first half of 2018. Sailing in the Anthony Veder fleet, Coral EnergICE is opening a new phase in Baltic LNG shipping.
The newbuilding is the first coastal LNG carrier to be constructed to the ice class 1A Super standard and is the largest in a growing fleet of such vessels active in the Baltic. It can serve all the region’s terminals, including those such as the Manga facility in Tornio, the northernmost port in the Bay of Bothnia, that are icebound during the winter months.
Coral EnergICE has been taken on long-term charter by Skangas, the LNG terminal-operating affiliate of Finland’s Gasum. Skangas will utilise the ship to deliver LNG to Manga and to Pori, its other Finnish receiving terminal, on the country’s south coast.
One of the 10 LNG carriers completed by DSME during the first half of 2018 is particularly notable for its cargo-handling attributes. The 180,000 m3 LNG Schneeweisschen is the yard’s first dual-fuel LNG carrier completion to be equipped with a full reliquefication system. It is also DSME’s first LNGC to be powered by X-DF engines.
DSME has developed its full reliquefication engineering package – which it terms its methane refrigeration system-full reliquefication (MRS-F) design – as a complement to its earlier partial reliquefaction system (PRS) concept. The shipbuilder points out that with the MRS-F technology, it has optimised the reliquefication option for both X-DF and ME-GI LNG carriers.
DSME explained that by combining the PRS and MRS technologies, full reliquefication of the LNG carrier’s boil-off gas is possible for all operating scenarios, including the at-anchor state. The MRS only needs to come into play at ship speeds below 15 knots, as the PRS covers any reliquefication requirements that may arise at higher ship speeds.