Energy major Shell is moving to increase the number of LNG carrier newbuildings it has on order to 18 vessels by signing up shipowners to berths it has reserved in South Korea.
TradeWinds understands that Shell may start by awarding time-charter contracts to back four more ships in the near term, on top of the 14 contracted by owners last year.
In previous years, Shell has timed the conclusion of its LNG newbuilding charters for the year-end period.
New names
Sources following the business said talks are ongoing with owners, including new names for Shell.
Longer term, the major is said to be keen to bring its total of new LNG carriers up to 22.
Talk of possible new fleet additions comes as the company moves to dispose of two 10-year-old, tri-fuel diesel-electric (TFDE) LNG vessels in what would be rare secondhand sales.
Shell kicked off its LNG fleet expansion and renewal in December 2019 with eight vessels contracted at Hyundai Heavy Industries and affiliate Hyundai Samho Heavy Industries.
In this first tranche, Shell Tankers (Singapore) signed time charters for four LNG newbuildings contracted by Norway's Knutsen LNG, two for newbuildings ordered by Korea Line Corp and a further pair of vessels contracted by investors advised by JP Morgan Asset Management.
Knutsen LNG: 9 vessels
JP Morgan: 7 vessels
Korea Line: 4 vessels
Pan Ocean: 4 vessels
Yards: Hyundai Heavy Industries and Hyundai Samho Heavy Industries
Delivery dates: 2022 onwards
Pricing: started at $187m to $188m each, with latest ships reported at $198m
The 174,000-cbm newbuildings are being built with dual-fuel X-DF engines, boil-off management plants, air lubrication systems and shaft generators for auxiliary power.
They are due for delivery from mid-2022 onwards.
At the time, Shell said the vessels would be integrated into the company’s time-chartered trading fleet.
The major gave no details about the period or hire on the ships but market sources said at the time that they were secured at rates in the low $60,000s against seven-year periods.
In August, Shell swooped again. Each of the three owners declared another two optional LNG slots against charters with the major, bringing Shell’s total to 14 vessels.
These ships are due for handover dates in 2023.
TradeWinds reported at the time that another six optional berth slots had been secured with HHI.
Hidden extras
In addition, JP Morgan has three LNG carriers on order at Samsung Heavy Industries that are understood to be committed to a charterer. The company also bought an LNG resale in July. All four vessels are rumoured to have been secured against Shell charters.
These four ships plus an additional incoming quartet could help boost the major’s vessel total to its 22-ship target.
Shell, which aims to be a net-zero emissions energy business by 2050 or sooner, has been trying to improve the efficiency and emissions profile of its fleet.
In July, the company rolled out its decarbonisation strategy for shipping, citing the newbuildings as one of the ways the company is reducing emissions in its operations.
Aside from ordering new vessels, Shell is also in the process of shedding two of its older ships.
The company is weighing up offers on its TFDE, 170,000-cbm Methane Patricia Camila and Methane Mickie Harper (both built 2010).
