Cosco Shipping Energy Transportation (CSET) and PetroChina are teaming up for a $555m order at Hudong-Zhonghua Shipbuilding.
According to CSET and industry sources, the company and oil producer PetroChina plans to sign orders at the compatriot shipyard to build three LNG carriers for $185m each.
The venture will make $600m in total investments, including financing and other costs.
A gas expert said the LNG carriers will be used to carry cargoes from Cheniere Energy’s production facilities, where PetroChina has secured 1.2 million tonnes per annum on long-term contracts lasting until 2043.
“The signing of the LNG newbuildings was supposed to take place at the end of last year but there was a delay. The official contract will be signed soon,” said the gas expert.
“Once the shipbuilding contract is signed, it will take about 30 months for Hudong Zhonghua to build the gas carriers. We are looking at end 2022 and early 2023 delivery.”
Some shipbuilding players believe the newbuilding contract will include options for three additional vessels.
An official at Hudong-Zhonghua declined to comment on his shipyard’s newbuilding activities, citing contract confidentiality.
Booming business
CSET, part of the state-controlled China Cosco Shipping group of companies, said the new LNG firm will have a registered capital of $126m.
CSET subsidiary Cosco Shipping LNG Investment Co (Shanghai LNG) will be the major stakeholder of the outfit with 60%, while PetroChina’s shipping arm Glasford holds 19%. The remaining 21% is owned by Cosco Shipping Petroleum.
“Our internal estimates show the economics of the three newbuilding ships can work and the risk is under control,” Shanghai and Hong Kong-listed CSET said.
“We will be able to continue expanding in the LNG shipping sector with this project.”
Riding on China’s rising LNG imports, CSET has been significantly expanding its LNG shipping capacity in recent years.
The company had stakes in a total of 35 ships totalling 5.9m cbm as of the end of 2019, including nine ships delivered last year. All of those ships are tied to long-term shipping contracts.
Hudong Zhonghua is currently the only shipyard in China that builds large LNG carriers.
Last week, Qatar signed a potential 16 vessel order worth CNY 20bn ($2.85bn) with Hudong Zhonghua.
The Middle East LNG producer has reserved eight 175,000-cbm firm LNG newbuildings berth slots, plus a similar number of optional slots.
