China’s Jiangnan Shipyard has inked an LNG carrier newbuilding contract worth $470m from a domestic buyer.
The order is the first LNG carrier deal to be booked at a Chinese yard this year.
In an announcement to the Hong Kong Exchange, China Taiping Insurance Holdings Co disclosed that Taiping & Sinopec Financial Leasing (TSFL) — a non-wholly owned subsidiary of the Group together with two special purpose vehicles (SPVs) — Taiping 26 and Taiping 27 had struck newbuilding contracts with Jiangnan Shipyard for two LNG ships.
TSPL/Taiping 26 and TSPL/Taiping 27 have each ordered one 175,000-cbm newbuilding against long-term bareboat charter contracts to Singapore’s Shandong Marine Energy (SDME).
The charter period for the LNG ships is for 180 months and SDME holds an option to purchase the gas carriers at around $55.8m per ship.
If the charterer does not exercise the purchase options, it will need to pay Taiping 26 and Taiping 27 $40m each.
Jiangnan is scheduled to deliver the first LNG carrier by March 2027 and the second vessel by July 2027.
China Taiping estimated that the total value of the charter contract for the first LNG carrier is around $315.7m while the second vessel is about $316.5m.
The Hong Kong-listed company said the LNG carriers deal is beneficial to TSFL as it increases the income of the finance leasing business and is in line with the group’s business development strategy.
News of SDME — a subsidiary of China’s third-largest shipping company Shandong Shipping entering the LNG carrier segment was first reported in TradeWinds last year.
Then, Jiangnan was reported to have pencilled preliminary deals with the Singapore-registered company for two newbuildings at $230m apiece.
It appears Jiangnan has increased the newbuilding price of the LNG ships by $5m per ship due to inflation and rising costs.
Gas sources said SDME will be using the LNG carriers to transport cargoes for Sinopec.
SDME is a relative newcomer to the LNG carrier segment. The company made its debut in the sector in April 2022 when it acquired the Japanese-built, 137,000-cbm Shandong Juniper (ex-Gemmata (built 2004) from Shell for undisclosed amount.
Besides owning Shandong Juniper, SDME also controls the 145,000-cbm Methane Heather Sally (built 2007). It has chartered the Samsung-built LNG ship from Huaxia Financial Leasing.
Jiangnan is the oldest shipyard in China. The shipbuilder was the country’s first yard to break into the gas carrier sector, winning an order from a Chinese company to build a 3,000-cbm pressurised LPG carriers in the late 1980s.
Jiangnan made its debut in the LNG carrier business early last year when Middle Eastern shipowner Adnoc Logistics & Services (Adnoc L&S) ordered two 175,000-cbm LNG carriers for around $200m per ship.
The Middle Eastern owner then ordered four more newbuildings, lifting the total number of LNG carriers it booked at the Chinese shipyard to six.
Jiangnan is due to deliver two ships to Adnoc in 2025, three in 2026 and one in early 2027.
