Surge in LNG carrier orders at South Korean shipyards

Shipowners flocked to South Korean shipyards in the first three months of this year to order LNG carriers, most of which have been contracted on a speculative basis.

Figures compiled by TradeWinds from brokers and yards show 16 LNG newbuildings were booked during the first quarter. Twelve of them are thought to be charter free.

The orders are already closing in on the 21 LNG ships logged throughout 2017.

This first quarter total includes one LNG bunker vessel, the first to be designed and ordered specifically to fuel long-haul containerships, which was the lone unit to be signed by a Chinese yard.

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It also includes a new entrant to the LNG arena: Andreas Martinos-led Minerva Marine, which signed up for two ships at DSME.

Fellow Greek owners Alpha Gas and TMS Cardiff Gas, neither of which had grown their LNG fleet for several years, made a return to the yards while existing players including BW Gas, Flex LNG and GasLog took advantage of newbuilding prices to extend their positions.

NYK Line and Knutsen OAS Shipping signed up to slots against term-project business.

Korea Development Bank-controlled DSME took the lion’s share of the orders, stacking up eight vessels, amid complaints from its rivals of price cutting.

No floating storage and regasification units were contracted during the quarter.

Shipbrokers and equipment manufacturers say they expect the number of LNG newbuildings for 2018 to at least double by the year-end as owners move to secure slots for 2020 delivery in anticipation of a predicted shortfall in tonnage.

South Korean analysts NH Investment & Securities raised its forecast for the year to 50 vessels.

Those following the newbuilding market pointed out that a number of owners are sitting on optional berth slots. One highlighted Christos Economou-controlled TMS Cardiff Gas as holding four LNG options, three at Hyundai Heavy Industries and another at Samsung Heavy Industries.

But yards are also monitoring other LNG business.

TradeWinds recently reported that in the coming months energy major Shell is expected to emerge in the market for LNG tonnage.

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Project business from as-yet-unsanctioned but planned developments such as Mozambique LNG, Arctic LNG-2, Golden Pass LNG and Qatar’s production expansion also hold the promise of fresh business, although it is unclear how quickly these projects will progress this year.

“We are all wondering what the next FID [final investment decision] will be,” one LNG player said.

Additional small-scale LNG carrier orders are also expected.

The bulk of these are likely to be required for LNG fuelling projects as deepsea shipowners start to take decisions on how to meet the incoming tougher emissions standards for their vessels from 2020.

LNG carrier orders in first quarter 2018