Zim Signs $1B LNG Supply Agreement with Shell
![Zim LNG agreement](/media/images/article/Photos/Vessels_Large/zim-vessel-file-image.3fc617.jpg)
Zim is taking steps to launch its new fleet of LNG-fueled containerships as part of an effort to expand its operations and address the need for decarbonization of its fleet. The Israel-based carrier signed a first supply agreement valued at more than $1 billion with Shell for LNG. This comes as construction is now underway on the first of Zim’s LNG dual-fuel containerships being built in South Korea.
The 10-year sales and purchase agreement with Shell calls for the supply of marine liquefied natural gas to Zim for its new fleet of 10 LNG dual-fuel containerships, which will begin operating in 2023 and 2024 between China, South Korea, the U.S. East Coast, and the Caribbean. Details were not announced on where the bunker would be conducted or the amount of LNG that Zim agreed to purchase under the terms of the contract. The company noted that the agreement with Shell may also cover other trades where ZIM LNG vessels could be deployed.
"With the addition of significant LNG-powered capacity to our fleet, beginning in 2023, we have positioned ZIM as a leader in carbon intensity reduction among global liners,” said Eli Glickman, ZIM President & CEO. “We are pleased to execute this long-term supply agreement with Shell to secure LNG at competitive terms and look forward to partnering with a global industry leader such as Shell as we take an important step to ensure our fuel sourcing is well planned and of the highest quality.”
The first block was recently positioned at the shipyard in South Korea for Zim's first 15,000 TEU LNG containership (Zim)
Zim entered into a long-term charter agreement in February 2021 with Seaspan which is building the 10 containerships each with a capacity of 15,000 TEU. Korean-based Samsung Heavy Industries was commissioned by Seaspan to build these vessels. Separate reports indicated that work has begun on at least the first two vessels of the class. The ceremonial first steel cut for the first vessel happed on December 16, 2021, followed by the keel laying on July 19, 2022, at Samsung Heavy Industries shipyard in Geoje, South Korea. The first vessel will be named Sammy Offer in honor of a well-known Israeli shipping magnate who died in 2011. First steel for the second vessel of the class, which is being named ZIM Mount Denali, took place on March 29, 2022.
The company is highlighting the environmental benefits and reduced emissions from LNG operations. Zim said on the basis that LNG emits approximately 20 percent less GHG when compared to conventional marine fuels, using LNG on these ten ships “is equivalent to having two out of the ten vessels in the fleet with zero emission.”
In addition to the first 10 LNG vessels, Zim and Seaspan expanded their relationship with the addition of a class of 7,000 TEU dual-fuel container vessels. The companies initially announced a long-term charter for 10 vessels in this class in July 2021 with Zim later exercising an option for five additional vessels from Seaspan. The company also announced in 2022 a new eight-year charter agreement for three more 7,000 TEU dual-fuel vessels with a shipping company that is affiliated with Kenon Holdings, one of the largest investors in Zim. These three vessels will be constructed at Hyundai Samho Heavy Industries in South Korea and are scheduled to be delivered during the first and second quarters of 2024.
Zim is currently ranked the tenth largest carrier according to Alphaliner. They report a fleet of 139 vessels with a capacity of nearly 516,000 TEU. The 27 LNG vessels on order will have a combined capacity of 176,000 TEU or nearly a third of the company’s current capacity. Zim highlights that it works with an asset-light model where nearly all of its vessels are under charter and many are on short-term agreements permitting the carrier to rapidly adjust operations to market conditions.