Hudong-Zhonghua Shipbuilding (Group), China’s only large LNG carrier builder, plans to double its annual output of these high-value vessels to 12 before 2025.
Speaking to TradeWinds, Hudong-Zhonghua president Chen Jun says it currently delivers four to six LNG carriers per year.
“This is a small number of ships if we compare it to other LNG shipbuilding countries like South Korea,” he says. “With this few vessels, it will not encourage the growth and supply of domestic LNG equipment makers.
“If we are to build more LNG carriers, the number of equipment makers in China will increase and this will enhance our shipbuilding capacity and competitiveness. Currently, most of the equipment and components we install onboard the newbuildings are manufactured overseas.”
Relative newcomer
Hudong-Zhonghua is a relative newcomer to the LNG sector.
The yard won its first order in 2004 when it landed a contract from China LNG Shipping (Holdings) for six 147,000-cbm vessels.
In 2011, it sealed its first export order of four 172,000-cbm newbuildings from a joint venture between Japan’s MOL and China Shipping Development Co.
The Shanghai-based shipyard has delivered 20 LNG carriers since it built its first vessel — the 147,000-cbm Dapeng Sun — in 2008.
“Hudong-Zhonghua spent around 10 years studying and developing LNG carriers,” Chen said.
“Our first newbuilding took us around three-and-a-half years to build from signing contract to delivery. But these days, it only takes us around 28 months from contract signing to vessel delivery, or 22 months from steel cutting to delivery. South Korean shipyards are taking an average of 20 months.”
Team player
Hudong-Zhonghua says the company has a good record of zero containment system leakage on the LNG ships it has delivered. It attributes this to its strong welding team.
“They are our special welding team and they only concentrate on LNG newbuildings,” he says. “It takes approximately one year to train a new employee to become a fully-fledged welder and the training cost is about CNY 250,000 ($35,500). We have around 200 of them.”
Hudong-Zhonghua, which is under the control of China State Shipbuilding Corp (CSSC), is proud to have built good-quality LNG vessels.
“CLNG/Teekay was supposed to send one of the 174,000-cbm ships for the standard two-and-a half years’ service maintenance," business and marketing director cum senior engineer Shen Ning says.
"However, the company decided to skip that service and will only be sending the LNG carrier on the fifth year.”
Besides being the only large LNG shipbuilder in China, Hudong-Zhonghua claims it is also the only shipyard in the world currently offering both Mark III and NO96 membrane-type vessels.
To date, its Mark III experience has been building a single 18,600-cbm LNG bunker for Japan’s MOL.
Position threatened
Four years ago, Hudong-Zhonghua almost lost its reputation as being China’s only large LNG shipbuilder when Dalian Shipbuilding Industry Co (DSIC) sealed a deal with Sinopec and China Shipping Group to build two 174,000-cbm LNG newbuildings.
However, the contract was cancelled as the order was seen as a costly exercise for the northern shipyard, which was making its entry into LNG carrier construction.
But Hudong-Zhonghua’s position as the sole builder of large LNG carriers remains under threat.
Sino-Japanese joint venture Nantong Cosco KHI Ship Engineering (Nacks) and Dalian Cosco KHI (Dacks) are looking to enter the sector.
The shipyards’ Japanese shareholder — Kawasaki Shipbuilding Heavy Industries (KHI) — is shutting down 30% of capacity at its main shipyard in Sakaide, Japan, with the closure of a dock.
It will focus merchant ship production at Nacks and Dacks. The shift will also involve constructing LNG tonnage at the joint shipbuilding companies.
“We are not too worried,” Chen says. “We are already in competition with them and South Korean shipyards. KHI is only tapping China’s lower construction cost and huge source of labour supply amidst expensive Japanese labour cost and [a] greying population.”
“Currently, there are already a few shipyards in China that are constructing LNG ships. But they are building small to midsize vessels and using Type B or C cargo-tanks.
“It is good if we [Hudong-Zhonghua] have other Chinese shipyards pursuing LNG shipbuilding projects as that will make us run faster and work harder.”
Hudong-Zhonghua says it has an order backlog of more than 10 LNG carriers and LNG-related newbuildings, including MOL’s 18,000-cbm LNG bunker vessels and two floating storage and regasification units for Dynagas.
