A pairing of two shipowners and a single owning company are being lined up to share the next batch of Arc7 LNG newbuildings for Russia’s Arctic production.
Industry sources said up to six newbuildings and a similar number of optional vessels that are due to be signed at DSME will be shared between Russian owner Sovcomflot (SCF Group) and a pairing of Japan’s Mitsui OSK Lines with its long-standing partner on LNG tonnage, China Cosco Shipping.
They indicate shipbuilding contracts could be signed on the ships this month. The vessels will be contracted against long-term contracts with Novatek and its partners in the new liquefaction projects that the Russian energy company is developing in the Arctic.
These include the under-construction 19.8-million-tonnes-per-annum Arctic LNG 2 project, which is due to start up in 2023.
Novatek is also working on the 4.8-mtpa Obsky LNG project and Arctic LNG 1 and 3, which could see a combined 70 mtpa of LNG being exported from the region in the longer term.
South Korea’s DSME has been waiting patiently to land its next Arc7 newbuilding haul.
The shipyard built the world’s first Arc7s, which are now serving the Novatek-led Yamal LNG project.
DSME had been expected to sign for these upcoming ships in June. But the business was put on the back-burner for the summer after it was leapfrogged by Smart LNG’s contracts for 10 Arc7s, which were inked at Russia’s Zvezda Shipbuilding Complex last month.
Upcoming orders
Finance has now been put in place for these ships.
Zvezda, which is working with Samsung Heavy Industries on LNG carrier construction, will build 15 Arc7s — the first for Sovcomflot and the remaining 14 for Smart LNG, a joint venture of Novatek and Sovcomflot.
Attention has now turned to the upcoming orders at DSME. It remains a little unclear how many of the potential 12 vessels the yard could eventually net.
Some of the optional vessels could go to China’s Hudong-Zhonghua Shipbuilding (Group), but this may not be decided until later in the year.
China is buying Russian LNG and partnering Novatek on its Arctic projects.
Under previous LNG sale-and-purchase contracts, the Chinese authorities have laid down that ships built in China will have a share in transporting these volumes.
But the situation is complicated at Hudong-Zhonghua, China’s key LNG shipbuilder.
The yard signed a berth reservation slot deal with Qatar Petroleum in April, under Qatar’s deal to build more than 100 LNG carriers for its liquefaction expansion and fleet renewals.
Those working on the business said Hudong-Zhonghua may first need to see the delivery requirements on these Qatari vessels when they are firmed up before it can decide how to accommodate the ships for Russia.
