Shipbuilders chart new waters
Boom in industry-leading LNG carrier orders proof of progress made by nation’s manufacturers
Chen Jun, general manager of a State-owned shipbuilding corporation’s subsidiary in Shanghai, sought cooperation with major shipyards in Asia in the late 1990s to help build China’s own liquefied natural gas, or LNG, carrier.
However, Chen and his colleagues were given the cold shoulder. They were even told by their Japanese counterparts there was no way Chinese shipbuilders would be able to build their own LNG carriers in the next 20 years.
Large LNG carriers are considered by the shipbuilding industry to be just as challenging to construct as aircraft carriers and luxury cruise ships.
In the late 1990s, Japan and South Korea dominated the LNG carrier construction market. As a result, Chen’s company — the Hudong-Zhonghua Shipbuilding (Group), a subsidiary of China State Shipbuilding Corp, or CSSC — searched for partners across Europe, and European shipbuilders expressed great interest.
In 1999, an agreement was reached between Hudong-Zhonghua and the French companies of Gaztransport & Technigaz, or GTT, for patent technology, and with Chantiers de l’Atlantique for design technology, Xinhua News Agency reported.
“The LNG carrier construction market shifted from Europe to Asia, but instead of cooperating with Chinese shipbuilders, other Asian shipyards wanted to continue dominating the sector,” Chen said.
However, in 2008, the HudongZhonghua completed the maiden delivery of China’s first self-built LNG carrier the Dapeng Sun, and such dominance ended.
Chen heads the giant ship manufacturer, which is located alongside the Huangpu River in Shanghai and has more than 20,000 employees. His enterprise has delivered more than 40 vessels, and last year it received orders to build 37 LNG carriers.
Thanks to the efforts of HudongZhonghua and other Chinese shipyards, China has made huge strides in the LNG carrier sector. The country received more than 30 percent of new orders globally last year, up from 7 percent a year ago — making China a major player in LNG carrier building.
Chinese shipyards received a record 55 orders for LNG carriers last year, solid proof that the nation’s shipbuilding industry has cashed in on soaring global demand for such vessels, making China an important player in global energy transportation.
As the world’s largest shipbuilder, CSSC received 49 orders for LNG carriers last year, raising its global market share from less than 7 percent in 2021 to about 30 percent. HudongZhonghua snatched the lion’s share of 37 orders.
Hudong-Zhonghua’s delivery schedule is full until 2027. Song Wei, its chief engineer, said this is not down to luck, but to persistent hard work and a strong determination to overcome difficulties.
Due to this special form of natural gas, shipping it in a liquefied state at a temperature below -163 C is the most cost-efficient method.
It costs more than 1 billion yuan ($139.8 million) to build a single LNG carrier, equivalent to the cost of constructing two Boeing 737 aircraft.
A 174,000-cubic-meter LNG vessel typically carries about 100,000 metric tons of LNG safely across thousands of kilometers of ocean. Building such specialized cargo carriers requires state-of-the-art manufacturing techniques, as the vessels are made from more than 1.1 million components.
Responding to the central government’s call to build domesticallymade vessels, Hudong-Zhonghua launched the LNG project in 1998. It decided to introduce patented technology for a liquefied cargo containment system from GTT of France.
In March 2002, the shipyard won the bid for the LNG project in Guangdong province to construct two 147,000-cu-m carriers, with the option of building an additional vessel.
Construction of China’s first homebuilt LNG carrier started at HudongZhonghua in December 2004.
“By the time our first ship (a firstgeneration vessel) was delivered in 2008, a second-generation LNG carrier had been built by a South Korean shipyard,” Song said. As high-valueadded vessels, LNG carriers have been upgraded from generation to generation due to constant market demand for higher efficiency.
Following a requirement to load more LNG with less consumption of energy, in 2007, a team of about 30 led by Song started work on independently researching and developing the second-generation Changjian series. Hudong-Zhonghua received its first order for this model in 2010, and it went into operation in 2015.
“This was a key turning point and proof that Hudong-Zhonghua was capable of developing and building large LNG ships on its own,” Song said. “However, at the time, global LNG carriers were entering the thirdgeneration phase.”
The shipyard kept narrowing the gap with its international peers by introducing the third-generation Chang’an series and fourth-generation Changxing series, receiving the first orders in 2012 and 2017, respectively.
“Facing fierce competition from top shipbuilders in South Korea, our annual new orders have maintained at between 6 percent and 8 percent of the global total for the past few years. We have continued to sharpen our development capability to win increased international recognition,” Song said.
In December 2021, HudongZhonghua unveiled a fifth-generation 174,000-cu-m LNG vessel in its Changheng series and received 34 orders for these ships last year. Its global market share rose from less than 7 percent in 2021 to 21.8 percent last year.
Compared with the previous generation, the Changheng series reduces more than 10 tons of carbon emissions per day. In addition, the shipbuilder said the new model can carry 800 cu m more LNG than the previous generation.
When orders held by the domestic LNG shipbuilding sector reach a record scale, this will not only promote the high-quality development of the nation’s shipbuilding industry but also ensure energy security, Song said.
China can form a strong and complete LNG industrial chain, Song added.
“There appeared to be explosive global demand for LNG last year due to the worldwide pursuit of carbon neutrality, and a logistics restructuring. Meanwhile, China’s LNG demands require massive transportation for such energy,” Song said.
Against this backdrop, LNG carriers have become popular in the shipbuilding market.
A total of 182 orders for such ships were placed last year, compared with 83 in 2021, and the number more than tripled the past five years’ average of 59, China Newsweek reported, citing data from Clarksons Research.
China imported more than 77 million tons of LNG in 2021, a rise of 18 percent year-on-year, General Administration of Customs statistics show.
Although the comparable figure for last year declined for the first time in seven years, China’s LNG imports this year are expected to rise by more than 6 percent year-onyear, the International Energy Agency forecast in its latest Gas Market Report.