Shipowners with LNG newbuildings contracted at Hyundai Heavy Industries against term time charters with energy major Shell are set to ink up to six LNG carrier newbuildings worth just over $1bn in total as they firm up existing optional berths.
TradeWinds understands that six firm vessels are to be added to the eight LNG newbuildings already confirmed at HHI and Hyundai Samho Heavy Industries by three shipowners at the end of last year.
It is unclear how these will be divided up among the owners as yet but, if confirmed, this could provide Shell with 14 LNG carrier newbuildings.
Late last year, Norway’s Knutsen LNG contracted four vessels, Korea Line of South Korea two and JP Morgan Asset Management investors a further pair. All of the ships were contracted against seven-year-plus charters with Shell.
No comments were made on any optional berths attached to the newbuildings at the time.
Fresh options
TradeWinds has also been told that a further six fresh optional slots have been reserved at HHI for similar business, which gives the energy major the chance to up its tally of LNG newbuildings to 20.
This month, JP Morgan was seen buying a distressed LNG carrier newbuilding that was originally ordered by Nisshin Shipping of Japan. The US investment bank was reported to have paid $160m for the resale, which is rumoured to have been bought against business with Shell.
Shell moved swiftly on LNG newbuildings last year, reserving berths and negotiating with potential owners on charter deals. Initially the major was seen requesting offers on eight ships but this later doubled to at least 16.
In early December last year, the energy giant said its Shell Tankers (Singapore) arm had signed time-charter contracts with the three owners.
The major detailed that the 174,000 cbm LNG carriers will be built by HHI and Hyundai Samho, and equipped with dual-fuel X-DF engines, boil-off management plants, air lubrication systems and shaft generators for auxiliary power.
The newbuildings will deliver from mid-2022 onwards and be integrated into Shell’s time-chartered LNG trading fleet, the major said.
TradeWinds reported at the time that the ships were fixed at rates in the low $60,000-per-day range against seven-year charter deals.
Knutsen LNG’s newbuildings at HHI are listed on Clarksons' Shipping Intelligence Network as having been contracted at $187.9m each.
Order drought
Newbuilding prices for all types of vessels have been falling at shipyards as the current drought for new orders continues.
Brokers said current LNG newbuilding prices have now dipped under the $180m mark. One newbuilding specialist said this week that berths can be secured for between $172m and $175m, depending on the specifications for delivery dates from late 2022 onwards.
Shell is moving to add LNG newbuildings to serve its gas portfolio and to replace older, less-efficient vessels as they come up for redelivery.
The company has already shed two of its remaining G-class LNG carriers for conversion projects.
Last week, TradeWinds reported that the major is moving to sell off two 2010-built LNG carriers, which were among the ships Shell inherited when it took over BG Group in 2016.
