South Korean Shipbuilders Get First Orders for Qatar's LNG Expansion
South Korea’s shipbuilders have begun to receive the first construction orders under their mega-deal with QatarEnergy, which could see more than 100 LNG carriers built by 2027. Daewoo Shipbuilding & Marine Engineering reported receiving the first order under the advance reservation agreement reached with Qatar in 2020 while saying that additional orders are expected in the future. Korean media reports are also linking QatarEnergy to an order at Hyundai Heavy Industries, both of which would be a follow-on to an order with Chinese shipbuilders in April for additional LNG carriers.
QatarEnergy is planning a significant expansion of the shipping fleet to support its North Field Expansion Project. The project calls for annual LNG production to be increased from 77 million tons to 126 million tons. In June 2020, Qatar announced what it called the world’s largest shipbuilding order saying it had reserved a significant portion of the LNG shipbuilding capacity. The agreements are with DSME, Hyundai, and Samsung Heavy Industries and follows a previous ship construction program carried out in the early 2000s.
DSME has a strong history with Qatar. Between 2004 and 2007 the shipyard received orders for half of all the LNG carriers built to support Qatar’s LNG operations. DSME delivered a total of 26 out of the 53 LNG carriers built in the prior program. Daewoo is recognized as one of the leading builders of LNG carriers and reports it has the capacity to build 20 of the vessels each year.
Under the terms of the new agreement, the Okpo Shipyard will build four LNG carriers each with a capacity of 174,000 cubic meters. The vessels will be equipped with a low-pressure dual-fuel propulsion engine (ME-GA) and re-liquefaction facility, which according to DSME will provide an eco-friendly ship that can significantly reduce air pollutant emissions. The ships will also have the latest technologies, including, the company's smart ship solution.
The contract, which is valued at $850 million, calls for the four LNG carriers to be delivered by the first quarter of 2025. As part of the agreement, a Korean consortium consisting of H-Line Shipping, Pan Ocean, and SK Shipping will operate the vessels for QatarEnergy.
Separately, South Korea’s news agency Yonhap is also linking a new order reported by Korea Shipbuilding & Offshore Engineering Co., the parent of Hyundai’s shipbuilding operation, also to QatarEnergy. KSOE reported in a regulatory filing that it has won a contract valued at nearly $430 million to build two 174,000-cubic-meter LNG carriers. The filing reports that the ships will be delivered to an undisclosed “European shipping company” in the first half of 2025.
The first shipbuilding contract to support the North Field Expansion Project was awarded in April 2022 to China’s Hudong-Zhonghua Shipbuilding Group. QatarEnergy entered into a charter agreement with Japan’s Mitsui O.S.K. Lines for the operation of four new gas carriers to be built by the CSSC subsidiary. Work on designing the four new ships was announced in an agreement with Hudong in October 2021.