China: ailing shipbuilding sector to get an LNG push

With the goal to restructure the country’s shipbuilding sector that has seen better days and secure its energy supply, Chinese shipyards are aiming high with a planned intake of new orders in the amount of $10 billion, for new LNG carriers over the remainder of the decade.

China plans to use the LNG newbuilds as leverage in the push to challenge Japanese and South Korean shipyards that have been the main builders of high-tech LNG vessels over the last 30 years.

American Bureau of Shipping expects that up to 50 LNG carriers or more than 20% of the total 225 LNG vessels expected to be added worldwide by the end of 2020 are set to be built in China, reports Reuters.

“In the future, our output is going to outstrip that of Japan and Korea,” said Yang Baohe, principal naval architect at the Marine Design & Research Institute of China, a subsidiary of China State Shipbuilding Corporation (CSSC).

China sees an opportunity in developing the skills and technology to build more sophisticated ships as the global shipbuilding industry emerges from a five-year downturn, the worst in 30 years.

The country is fighting the battle against carbon emissions and plans to double its gas supply and triple the LNG import by 2020, but apart from Hudong-Zhonghua, no other Chinese shipbuilding company has a respectable track record in building LNG carriers. This puts Chinese shipyards in a bad position as they are not likely to start winning any orders for projects outside China, due to the lack of experience, according to a South Korean rival, Samsung Heavy Industries. Most contracts, like the 14 vessels being built by Hudong-Zhonghua will be used to transport LNG from Papua New Guinea and Australia to China.

ABS vice president of global gas development, Bill Sember said that China needs to put about $9 billion to $10 billion into expanding its fleet.

LNG World News Staff, August 5, 2014; Image: HZ-Shipgroup