South Korean shipbuilders are negotiating with Qatari state-owned companies for contracts worth an estimated $3.3 billion to build additional liquefied natural gas (LNG) carriers. The growing demand for LNG carriers and container ships is driving vessel prices close to record highs.
Since June, HD Korea Shipbuilding & Offshore Engineering Co. (HD KSOE), along with Samsung Heavy Industries Co. and Hanwha Ocean Co., has been in talks with QatarEnergy, formerly Qatar Petroleum, to supply a total of 10 LNG carriers. Industry sources in Seoul reported that QatarEnergy is seeking Q-Max LNG carriers, which have a capacity of 270,000 cubic meters, compared to the standard 174,000-cubic-meter vessels.
The Q-Max carriers, named for their maximum size and the fact that they can dock at Qatar’s LNG terminals, are priced higher than standard carriers due to their larger capacity. Earlier this year, Hudong-Zhonghua Shipbuilding, a subsidiary of China State Shipbuilding Corp. (CSSC), agreed to sell 18 Q-Max carriers to QatarEnergy for $6 billion, or approximately $330 million each.
If QatarEnergy places orders with South Korean shipyards at similar prices, the total value of the contracts could reach $3.3 billion. Samsung Heavy Industries, which has experience in manufacturing Q-Max tankers, noted that a decision on the deal will depend on vessel prices and profitability.
South Korean shipbuilders have already secured contracts worth 13 trillion won ($9.5 billion) for standard-size LNG tankers this year and late last year. HD KSOE signed deals for 17 LNG carriers, while Samsung Heavy and Hanwha Ocean secured contracts for 15 and 12 vessels, respectively.
With increasing global demand for LNG carriers, South Korean shipyards are expected to win more deals. The global LNG industry requires an additional 100 LNG carriers on top of the 185 already ordered to meet the needs of new liquefaction projects.
As demand for LNG tankers rises, overall vessel prices are also expected to increase. Clarksons Research reported that its newbuilding price index reached 187.98 last month, approaching the all-time high of 191.6 recorded in September 2008. The price of new container ships has surged by 20.9% over the past year, driven by higher freight rates and increased orders.
South Korean shipbuilders, once reluctant to pursue container ship orders due to lower profitability, are now adapting their strategies to meet the growing demand for both container ships and LNG carriers, including those equipped with LNG dual-fuel power systems.
