US shale gas offers new hope for struggling shipyards cutting jobs

singapore — For the many shipyards in Asia that have been fighting to survive a slowdown by cutting jobs and seeking bailouts, rising demand for cleaner fuels is offering a glimmer of hope.

Contracts for vessels to transport liquefied natural gas are picking up amid an abundance of shale gas in the US and increasingly stringent curbs on pollution. The world may need about 180 more vessels to move LNG, benefiting shipbuilders with expertise in this area such as Hyundai Heavy Industries Co, Daewoo Shipbuilding & Marine Engineering Co, and Mitsubishi Heavy Industries Ltd, according to Hana Financial Investment Co in Seoul. “Gas is going to be the bright spot for shipbuilders,” said Park Moo-hyun, an analyst covering the shipbuilding industry at Hana Financial. “Gas prices have fallen, making it an economical option to generate electricity and power the transportation industry. We might see a spurt of orders as early as in the second quarter.” Shipments of LNG are projected to rise as much as five per cent a year between 2015 and 2030 as more gas is used as fuel in power stations and the marine industry instead of dirtier coal and oil, according to Royal Dutch Shell Plc estimates.

China and India will lead that demand, generating more jobs for Asian shipyards that have struggled with a drop in orders for offshore projects as oil prices have fallen by half over the last three years.

Asia is the largest destination for LNG, which is made by cooling natural gas until it becomes a liquid, making it suitable to be carried over long distances in specially built ships with insulated tanks. — Bloomberg