Na­tion’s ship­build­ing, en­ergy in­dus­tries bet on LNG

China Daily (Hong Kong) - - BUSINESSCOMPANIES - By ZHONG NAN in Shang­hai zhong­nan@chi­

China’s hunger for nat­u­ral gas has pushed its ship­build­ing and en­ergy in­dus­tries to build more liq­ue­fied nat­u­ral gas car­ri­ers and im­port ter­mi­nals, to give the na­tion an edge over other coun­tries.

“China will need more than 35 LNG car­ri­ers over the next two years to meet its surg­ing de­mand for nat­u­ral gas,” said Bao Zhangjing, di­rec­tor of the China Ship­build­ing In­dus­try Re­search Center.

In 2012, the coun­try con­sumed 147.1 bil­lion cu­bic me­ters of nat­u­ral gas and im­ported 42.5 bil­lion cu m.

The Chi­nese gov­ern­ment plans to raise the pro­por­tion of nat­u­ral gas in the en­ergy mix from 4.5 per­cent in 2011 to 8 per­cent in 2015, to fur­ther curb air pol­lu­tion.

As the do­mes­tic pro­duc­tion of nat­u­ral gas is still fairly lim­ited, China may raise its nat­u­ral gas im­ports to 80 bil­lion cu m by 2015, the en­ergy re­search in­sti­tute of China’s Na­tional De­vel­op­ment and Re­form Com­mis­sion fore­cast in July.

Large en­ergy com­pa­nies such as China Na­tional Petroleum Corp and China Na­tional Off­shore Oil Corp have all bought new LNG tankers to sup­port their nat­u­ral gas pur­chase over­seas.

The Shang­hai- based Hudong- Zhonghua Ship­build­ing ( Group) Co Ltd, a State- owned en­ter­prise and China’s only man­u­fac­turer of LNG car­ri­ers, de­liv­ered six LNG car­ri­ers to do­mes­tic and for­eign buy­ers be­fore 2010 and cur­rently has 14 or­ders for dif­fer­ent-sized LNG tankers, in­clud­ing or­ders placed in Au­gust by Bri­tish Gas Ser­vices Ltd and CNOOC Ltd.

“As China and de­vel­oped mar­kets such as Ja­pan and the United King­dom are ea­ger to ob­tain nat­u­ral gas from abroad, LNG car­ri­ers are ex­actly what they need,” said Lou Dan­ping, deputy chief engi­neer of Hudong- Zhonghua. “Our LNG car­rier­build­ing ca­pac­ity has grown along with their con­sump­tion de­mand and im­ports of nat­u­ral gas.”

The tech­ni­cal con­tent and added value of LNG car­ri­ers are much higher than those of oil tankers, and they must be equipped with tanks that can re­sist ex­tremely low tem­per­a­tures. The av­er­age life cy­cle for a LNG tanker is be­tween 40 and 45 years and its price range varies be­tween $ 250 mil­lion and $ 450 mil­lion, de­pend­ing on the func­tions and size of the ship.

“As China has be­come a hot mar­ket­place for the con­sump­tion of nat­u­ral gas, hav­ing the abil­ity to build LNG tankers in­de­pen­dently means that the coun­try is ca­pa­ble of strength­en­ing its en­ergy se­cu­rity on the sea,” Lou said.

To store the LNG from the in­ter­na­tional mar­ket, China is now op­er­at­ing six LNG im­port ter­mi­nals and eight LNG ter­mi­nals are be­ing built. CNOOC said in Septem­ber that it will build another five LNG ter­mi­nals by 2015.

There are only 13 ship­yards in the world that build such so­phis­ti­cated ves­sels. In 2012, there were about 100 LNG tanker or­ders placed by a num­ber of coun­tries. South Korea gained 90 of them and China only won four or­ders.

To grab more mar­ket share, Ja­pan’s Kawasaki Heavy In­dus­tries Ltd plans to build LNG tankers in East China’s Jiangsu prov­ince. The com­pany has set up Nan­tong COSCO KHI Ship Engineering Co Ltd, a joint ven­ture ship­yard with China Ocean Ship­ping (Group) Co. It aims to have an an­nual pro­duc­tion ca­pac­ity of two LNG car­ri­ers by 2018.

Also, to boost eco­nomic growth in a sus­tain­able way, China’s ship­build­ing in­dus­try is bet­ting on LNG-pow­ered ships amid ris­ing con­cerns over the ma­rine en­vi­ron­ment and “green” gov­ern­ment ini­tia­tives.

Last month, Jiangsu-based Tsu­jiu Heavy In­dus­tries Co Ltd de­liv­ered two LNG ships to Nor Lines AS, a Nor­we­gian ship­ping and lo­gis­tics com­pany. The deal, worth about $90 mil­lion, was the first over­seas de­liv­ery of LNG ships by a Chi­nese com­pany. The two LNG mul­ti­pur­pose cargo ves­sels will be used in Nor­way’s coastal re­gions.

“The Chi­nese gov­ern­ment now has a clear plan to in­tro­duce LNG as fuel, at 170 ships al­ready got ap­proval for con­ver­sion to LNG on the Yangtze River and they’re plan­ning to build more bunker­ing sta­tions,” said Tor Svensen, CEO of the mar­itime busi­ness at DNV GL, a ma­jor ship and off­shore clas­si­fi­ca­tion so­ci­ety.


Liq­ue­fied nat­u­ral gas is dis­charged from a ship to re­ceiv­ing sta­tions in Meizhou Bay, Fujian prov­ince.

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