Zhejiang Satellite Petrochemical splashes $414 million on VLEC quartet

Zhejiang Satellite Petrochemical (STL) has signed shipbuilding contracts with South Korean shipbuilding majors Hyundai Heavy Industries and Samsung Heavy Industries for the construction of four Very Large Ethane Carriers (VLECs) worth a total of $441 million.

Illustration, Image by Samsung Heavy Industries

Each shipbuilder has been entrusted with building two units, scheduled to start the delivery in the second quarter of 2022.

A total of six newbuilding vessels are required to support the anticipated growth in the production output in the second stage of development of STL’s new ethane cracking facility in Lianyungang .

STL said in a regulatory filing that 2 more vessels have been chartered from Tianjin Southwest Shipping Co., and that it was looking for prospective buyers for the ships who would lease back the vessels to the company again.

Tianjin Southwest Maritime is expected to order the ethane carriers at a Chinese yard.

The move is being announced on the back of a purchase deal signed with MISC Berhad, a Malaysia-based provider of energy-related maritime solutions and services, for six 98,000 cbm VLEC newbuilds already under construction.

Under the deal, MISC decided to buy the ships for around $726 million and charter them to STL for a firm period of fifteen years. 

Three VLECs are being built by Samsung, while three remaining VLECs are being built by HHI. All six vessels, ordered in 2019, are slated for delivery in 2020.

According to STL, these ships are going to be the largest ethane transportation ships in the world.

French liquefied natural gas containment system specialist GTT was selected to provide the membrane technology for the six VLECs, which will be multi-gas units with the ability to transport ethane and several other types of gas such as propylene, LPG, ethylene.

The tanks will also be LNG ready, allowing ships to carry LNG in the future without having to convert the cargo tanks.

Each ship is valued at around 122 million, according to the data from VesselsValue.

Once delivered, all newbuildings are earmarked for the transportation of raw materials from Texas to the new plant in Lianyungang.

The first 6 ships from the series have been ordered as part of the first phase of the project, while the second batch was ordered to support the second stage of the plant’s development set to go live in 2022.