Limited capacity in Asia limits room for new LNG vessels – Korea Shipbuilding exec

A liquefied natural gas (LNG) tanker is pulled towards a thermal power plant in Futtsu, east of Tokyo, Japan November 13, 2017. REUTERS/Issei Kato

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SEOUL, June 2 (Reuters) – Korea Shipbuilding & Offshore Engineering (KSOE) (009540.KS) has essentially filled its order book for the next 2-1/2 years as the pandemic boosted demand for carriers. containers, leaving little room to meet the needs of the liquefied natural gas (LNG) sector, said a senior company executive.

With increasing US LNG exports, more LNG carriers are traveling longer distances to customers in North Asia and Europe, while European countries have purchased floating storage and regasification units (FSRUs) as they increase their LNG imports to replace Russian gas supplies in the wake of the Ukraine crisis.

However, shipyards in South Korea and China are unable to meet demand for new LNG vessels as they scramble to meet a flood of orders for new container ships following disruptions in the global supply chain and port congestion that have blocked ships in the United States and China. This is supporting spot charter rates for LNG carriers which have reached all-time highs.

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“A huge volume of newbuild orders has filled slots in Chinese and South Korean shipyards,” KW Kim, senior vice president of Hyundai Heavy Industries (329180.KS), a flagship unit of the largest shipyard, told Reuters. manufacturer of LNG carriers in the world, KSOE. .

KSOE’s capacity is nearly full with orders stretching through 2025, he said, adding that container ships and LNG carriers each account for about 30 percent of slots. KSOE builds 20 to 22 LNG carriers per year.

South Korean shipyards are also struggling to operate due to labor shortages while grappling with nearly doubling prices for steel plate, Kim said.

“At this time, we cannot receive new orders from FSRU,” he added.

In 2020, Qatargas and TotalEnergies had reserved shipbuilding slots for LNG projects in Qatar and Mozambique respectively, he said, while US LNG producers are also looking for more ships as they grow. their exports.

“Shipowners enjoy good charter rates,” Kim said.

About half of new commercial ship orders are for ships powered by dual-fuel engines — LNG or methanol — with petroleum, he added. Hyundai Heavy builds container ships for AP Moller-Maersk that run on methanol.

Kim said there was also an increase in demand for smaller tankers – Aframax and mid-sized vessels – as Europe seeks to import more petroleum products from elsewhere to replace Russian supplies.

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Reporting by Joyce Lee and Florence Tan; Editing by Sonali Desai

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