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Floating technology opens new frontiers

NewAge sets its sights on African FLNG A tale of two markets – Thailand versus Indonesia

“We have seen growth in small-scale LNG projects, but we still face challenges completing the logistics chain and providing acceptable prices to end-users” Pertamina general manager LNG sales Irma Surya, page 22


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contents

January/February 2018

16

MARSAXLOKK LNG NEEDED > 0.1979 START > 2017

JORF LASFAR LNG NEEDED > 4.896 START > 2021

MONTEGO BAY LNG NEEDED > 0.272 START > 2016

ABIDJAN

COLON LNG NEEDED > 0.544 START > 2018

LNG NEEDED > 0.911 START > 2018

CARTAGENA LNG NEEDED > 3.54 START > 2017

MOMBASA

TEMA SERGIPE

22

LNG NEEDED > 0.734 START > NO DATE

Endeavour LNG NEEDED > 1.35 START > 2018

LNG NEEDED > 3.672 START > 2020

Comment

WAGP LNG NEEDED > 1.836 START > 2019

5 I t’s a busy year ahead, as full production starts at Yamal LNG and as up to three US LNG-export projects open for business

WALVIS BAY

Interview

LNG NEEDED > START > NO DATE

0.49

6E XCLUSIVE: NewAge LNG is exploring new frontiers with a flurry of offshore production projects in Africa. Founder and chairman Steve Lowden tells Karen Thomas why he’s pinning his hopes on emerging markets

CONCEPCION BAY LNG NEEDED > 1.496 START > 2020

26

RICHARDS BAY

Special report Africa FLNG

COEGA

LNG NEEDED > 4.896 START > 2023

LNG NEEDED > 2.448 START > 2023

10 Ross McCracken of Platts Energy Economist explains how new FLNG technology will unlock gas reserves in the global south 11 Infographic – six African projects that could bring 15M tonnes of LNG to market

Infographic 16 LNG-to-power projects are driving demand for a new generation of floating storage and regasification units. BMI Research names the hottest prospects

Area report Asia LNG 18 The LNG-trading landscape is changing – and nowhere more so than in

40

Asia. Hong Liang Lee reports 22 Gas reserves are dwindling in Thailand and Indonesia, forcing both to increase their LNG imports. What opportunities and challenges lie ahead?

Bunkering 24 Mike Corkhill looks back at 2017 – a landmark year for LNG as marine fuel

Ice-class operations 26 Arctic operations put new stresses on LNG carriers. The Russian Register of Shipping looks at the pressures on the 15 icebreaking vessels built to deliver cargoes from Yamal LNG

www.lngworldshipping.com

LNG World Shipping | January/February 2018


contents Technology 29 Connect LNG, Gas Natural Fenosa and Trelleborg have used floating technology to complete a groundbreaking LNG transfer 30 Mike Corkhill looks at the latest innovations in cargo monitoring and control systems

Statistics 33 Mike Corkhill tracks the LNG tonnage ordered and delivered in November and December 2017 36 Your comprehensive guide to the LNG carriers and floating storage and regasification units (FSRUs) on order and on the water

Viewpoint 40 SSY Gas director Debbie Turner makes her predictions for the year ahead for LNG shipping Front cover image (credit: Connect LNG and Gas Natural Fenosa)

Next issue March-April 2018 issue of LNG World Shipping Main features include: area report Middle East; Equipment feature: containment systems; Operations: terminal operations and escort tugs; Know-how: shipmanagement. Read the latest international LNG shipping news at www.lngworldshipping.com

January/February 2018 Editor: Karen Thomas t: +44 20 8370 1717 e: karen.thomas@rivieramm.com Consultant Editor: Mike Corkhill t: +44 1825 764 817 Brand Manager: Ian Pow t: +44 20 8370 7011 e: ian.pow@rivieramm.com Production Manager: Richard Neighbour t: +44 20 8370 7013 e: richard.neighbour@rivieramm.com Subscriptions: Sally Church t: +44 20 8370 7018 e: sally.church@rivieramm.com Chairman: John Labdon Managing Director: Steve Labdon Finance Director: Cathy Labdon Operations Director: Graham Harman Head of Content: Edwin Lampert Executive Editor: Paul Gunton Head of Production: Hamish Dickie Business Development Manager: Steve Edwards Published by: Riviera Maritime Media Ltd Mitre House 66 Abbey Road Enfield EN1 2QN UK

www.rivieramm.com ISSN 1746-0603 (Print) ISSN 2051-0616 (Online) ©2018 Riviera Maritime Media Ltd

Subscribe from just £299 Subscribe now and receive six issues of LNG World Shipping every year and get even more: • Special reports: LNG Carrier Lifecycle Maintenance, Small-Scale LNG, Offshore LNG and Ballast Water Treatment Technology • access the latest issue content via your digital device • free industry yearplanner including key dates • access to www.lngworldshipping.com and its searchable archive. Subscribe online: www.lngworldshipping.com

LNG World Shipping | January/February 2018

Disclaimer: Although every effort has been made to ensure that the information in this publication is correct, the Author and Publisher accept no liability to any party for any inaccuracies that may occur. Any third party material included with the publication is supplied in good faith and the Publisher accepts no liability in respect of content. All rights reserved. No part of this publication may be reproduced, reprinted or stored in any electronic medium or transmitted in any form or by any means without prior written permission of the copyright owner.

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COMMENT | 5

LNG SHIPPING –

BUSY YEAR AHEAD! T Karen Thomas, Editor

www.lngworldshipping.com

hree years ago, the LNG-shipping industry celebrated its golden jubilee – marking 50 years since Methane Princess unloaded the first commercial LNG cargo at Canvey Island in the UK. That landmark came five long years after the converted Methane Pioneer proved it was technically possible to carry frozen gas by sea. But that time span is the blink of an eye, when you consider that this fossil fuel was formed 550M years ago, long before dinosaurs roamed the earth. From that point of view, three years as editor of LNG World Shipping really is no time at all. But, as I look back on my time in this job, it’s been an exciting three years, for all that. We’ve seen countries as diverse as Malta and Jamaica, Pakistan and Poland, import their first LNG cargoes. We’ve seen the first LNG exports out of the US Lower 48 States. In 2017, floating LNG production came of age as the first FLNG project hooked up and started production off Malaysia. And by year-end project partners Total and Novatek had loaded their first LNG shipment from Yamal LNG, through the Russian Arctic port of Sabetta. Last year, we also saw the first purposebuilt LNG bunker-supply ships hit the water. By November eight had been ordered and four were due to have hit the water by year-end. Expect more LNG bunker-supply ship orders this year. Total needs to charter LNG bunker-supply ships that are twice the size of any built so far, to support CMA CGM’s nine next-generation ultra-large LNG-fuelled container ships. That CMA CGM order is a game-changer for LNG as marine fuel. For all the talk about decarbonisation of shipping, LNG looks set to become ships’ fuel of choice, at least for now. The year ahead will be busy and exciting for

LNG shipping. Yamal LNG will start commercial production and its backer Novatek may reach a final investment decision on its second north Russia project, Arctic LNG II. A flurry of new LNG-export projects, including up to three in the US, are due to start production. An additional 37M tonnes of LNG is due to come to market this year. Expect new import markets to emerge, to take advantage of this cheap, plentiful gas. Despite interest in floating storage and regasification units (FSRUs) and floating storage units (FSUs) to deliver faster, cheaper import prospects, these still require some investment in infrastructure, as Debbie Turner notes in her Viewpoint market forecast at the back of the magazine. There are 32 FSRUs and FSUs in service and 14 on order, but new speculative FSRU orders are few and far between.

There are 32 FSRUs and FSUs in service and 14 on order, but new speculative FSRU orders are few and far between Three years have flashed past. I leave you as the year ends in the capable hands of Mike Corkhill, who will track and analyse the latest developments in LNG shipping until a new editor takes the chair. Thank you for reading, and for your comments and suggestions. Here’s wishing you all good things – and a happy new year in 2018. LNG

LNG World Shipping | January/February 2018


Steve Lowden: emerging-markets focus

6 | RUNNING HEAD sub

SNAPSHOT CV: Steve Lowden Role: founder and chairman, NewAge (African Global Energy) Previously: senior vice-president Marathon Oil Executive director E&P and commercial and business development Premier Oil Educated: Imperial College, University of London

NEWAGE TAPS OPPORTUNITY IN AFRICAN FLNG D

espite new project approvals slowing to a trickle, due to the prolonged slump in global oil and gas prices, an industry newcomer hopes that 2018 will be the year that it decides to progress its plan to develop small floating LNG (FLNG) projects off the coast of Africa. Jersey-headquartered, London-based NewAge (African Global Energy) hopes to reach a final investment decision (FID) in 2018 on at least two FLNG projects. The long-term goal, said founder

NewAge LNG is working with Chinese partners to design and lease purpose-built FLNG vessels that will unlock its parent company’s offshore African gas reserves. NewAge (African Global Energy) founder and chairman Steve Lowden tells Karen Thomas why scaling down is the new scaling up

LNG World Shipping | January/February 2018

and chairman Steve Lowden, is for the company’s LNG business unit to lease “three or more” purpose-built FLNG vessels to tap small rich gas reserves – in Africa and beyond. Its parent company, founded in 2007, owns upstream interests across Africa and in Iraqi Kurdistan. It plans to build a boutique LNG business from those projects, tapping its upstream projects for small quantities of rich gas to sell to gas-to-power projects, particularly in China. It’s a business model that

turns on its head the notion that the bigger the project, the bigger the economies of scale – received wisdom among energy majors. NewAge’s premise is that FLNG is best suited to locations that lack shore-based industrial infrastructure and capacity and that have an under-developed domestic market. “The less developed the shore-based industrial capacity, the more suitable FLNG becomes in general,” Mr Lowden said. “Less developed, remoter parts of the world would need heavy investment in shore-

www.lngworldshipping.com


NewAge INTERVIEW | 7

based infrastructure, which adds material cost uncertainties. “For these countries, FLNG becomes the infrastructure and then an enabler for developing the domestic gas business. FLNG is also less capexintensive and more conducive to a lump-sum, date-certain construction model.” NewAge plans to lease newbuildings that can tap and process rich gas, found in small quantities of 3 tcf or less, in shallow waters, to support FLNG projects that produce up to 2M tonnes a year. “We studied conversions for two years,” Mr Lowden said. “But because we are focused on rich gas fields in shallow waters – fields rich in liquids – we have to do pre-processing. “To do that, we can either install two vessels for gas processing and FLNG, or one vessel for a combined purpose. We concluded that it was logical to put everything on one vessel – and so we ended up deciding to go for a newbuild, as there was nothing out there suitable to convert.” The decision then became whether to build a vessel with its own propulsion, or to add the processing and cryogenic systems to a traditional barge

or to one of myriad floating options that exist as designs but – at the time of writing – have yet to come to market. “If it’s a barge, your costs are less,” Mr Lowden said. “But once you get into deeper, less benign waters, you need to be fully shipped. Our focus has been on shallow, benign waters for which we can use a barge.”

Newbuildings

NewAge has gas reserves in Nigeria, Congo-Brazzaville, Cameroon and Ethiopia. In 2016, it went out to tender for an FLNG design to treat gas liquids and produce LNG. It awarded the contract to a consortium

comprising SBM, JGC of Japan, China National Offshore Oil Corp (CNOOC) construction arm China Offshore Oil Engineering and China’s largest shipbuilder, CSSC. The partners plan to design and build vessels for multiple applications. “The upstream costs will be paid for by the liquids,” Mr Lowden said. “The FLNG then stands alone, as a business. “We aim to keep the vessels relatively simple and at a volume of 1-2 mta that does not stress the upstream and is sized to meet point-to-point market opportunities. If you are building an FLNG vessel that can service multiple fields, you don’t need to stay at that location for 25-30

NewAge (African Global Energy) owns upstream assets across Africa

years, so you can produce at a much faster rate.” NewAge LNG hopes to reach FID on up to two projects in 2018. The first is its proposed 1 mta project in CongoBrazzaville, tapping gas associated with the Enioperated upstream oil project involving NewAge and SNPC. NewAge subsidiary CongoBrazzaville LNG (CBLNG) has secured government approval for the vessel and the offshore location and hopes to complete the fiscal arrangements shortly. If all goes to plan, Mr Lowden said, “we will be ready to go to FID before the end of 2018”, producing the first cargoes in 2022 or 2023. The second is in Cameroon, where NewAge is operator for the Etinde joint venture, which has rich gas and a development concession from the government that includes FLNG. This, too, may produce 1 mta of LNG. NewAge has completed the tender process for the vessel alongside the CBLNG tender process. “There is clear motivation for the stakeholders to want to take FID on this project before the end of 2018 – although

NewAge hopes to reach FID in 2018 on a 1 mta FLNG project off CongoBrazzaville. (Credit: JB Dodane)

www.lngworldshipping.com

LNG World Shipping | January/February 2018


8 | INTERVIEW NewAge

the upstream joint venture plans to drill more wells to prove additional gas, which may be sold to other domestic and export markets or used to expand the FLNG project,” Mr Lowden said. NewAge has yet to sign its first offtake agreement. And it will not cut steel until at least one project reaches FID. However, Mr Lowden hopes to synchronise the first two projects to optimise the work in the shipyard and with the topsides.

East Africa FLNG

In east Africa, Ethiopia and Djibouti are working on a third project that may or may not involve FLNG. Here, NewAge’s oil and gas discovery could support the project as a pipeline supplier alongside Poly GCL Petroleum, a joint venture between the China Poly Group and Golden Concord of Hong Kong that holds gas reserves of more than 4.5 tcf in Ethiopia. Poly GCL wants to pipe gas from landlocked Ethiopia’s Ogaden Basin to the coast off Djibouti, for liquefaction. The project aims to export 2-4 mta of LNG. NewAge could supplement the gas feed when the project comes to market, either to meet domestic demand or to boost exports of LNG via Djibouti. NewAge has been assisting the Ethiopian government on the pipeline issues. Poly GCL has been linked to talks with Singapore shipbuilder Sembcorp Marine and Engie of France, partners in Gravifloat, a floating platform designed to support either liquefaction or regasification offshore projects. NewAge is sitting this one out, however. “As a landlocked country, Ethiopia is not an obvious FLNG target,” Mr Lowden said. “The coastal location is Djibouti, which has a port and developed infrastructure. And Poly GCL

aspires to a multi-milliontonne LNG project that may well be too large for FLNG. “For us, the sweet spot – the real cost advantage for FLNG – lies in the segment below 2 mta… And I’m not yet convinced of the cost benefits associated with building gravitybased structures in a shipyard if the infrastructure and industrial capacity is sufficient for a landbased plant.”

New frontiers

So far, NewAge LNG has focused on projects that tap gas from the parent company’s upstream interests. However, it is also exploring FLNG opportunities, leasing additional vessels to tap into other gas reserves – including projects outside Africa. NewAge will not discuss the design or costs of its own vessels. The key, Mr Lowden said, has been to keep the design simple and fit for purpose to minimise the shipbuilding costs. China is an important part of the NewAge LNG business model. The company has

Chinese shareholders and it is to this market that the LNG unit hopes to sell its output. “We were keen to help the Chinese construction parties to secure an important position in the hi-tech FLNG business on the construction side, and on the consumption side,” Mr Lowden said. “Because we are producing rich gas, we can produce LNG at the hotter end of the spectrum. That makes it particularly suited to power generation, which should be consistent with LNGdemand growth in China for power generation.” NewAge is also supporting China’s drive to invest in emerging markets in general, notably in energy and infrastructure projects. In April 2017, its parent company signed a partnership deal with China Overseas Infrastructure Development & Investment, affiliated to the China-Africa Development Fund. Although it has no offtake deals to date, talks continue with prospective Chinese partners including CNOOC, particularly for Congo-

Brazzaville cargoes. “LNG is not much more than building a giant refrigerator – it’s not complicated,” Mr Lowden concluded. “What is complicated is putting the whole project together. Making everything work efficiently and effectively, from the engineering to the commercial arrangements to the various partnerships, is not straightforward. “It is important to get it right at the outset as the costs of making changes after kick-off – whether onshore or offshore – are significant. We believe that the costs escalate as you start to scale up the size of the project – and that if you scale up, they can increase disproportionately. “Another challenge comes with financing these projects. Such projects need robust economics – something that’s hard to achieve, given today’s low LNG prices, for a lot of projects. It’s also about securing world-class partners – that’s why we wanted Chinese involvement with this project and with our vessels.” LNG

NewAge hopes to produce 1 mta of LNG off Cameroon. (Credit: Alviso Forcellini)

LNG World Shipping | January/February 2018

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10 | AFRICA FLNG

AFRICA – A NEW FRONTIER FOR FLNG Tunis

Algiers

Rabat

Tripoli

Tunisia

Morroco

Cairo

Algeria

Libya

Egypt

estern ahara

t

Mauritania

Mali Niger Khartoum

Chad

Eritrea Asmara

gal

n

Bamako

Benin Ivory Coast

Liberia

Djibouti Djibouti

Abuja

Addis Ababa

Somalia

Ghana Togo Lome

Monrovia

Sudan N'Djamena

Burkina Faso

Guinea Sierra Leone

Niamey

Ouagadougou

Yamoussoukro

Nigeria

Cameroon

Accra Malabo

South Sudan

Central African Republic Bangui

Porto-Novo

Ethipia

Juba

Yaounde Mogadishu

Uganda Sao Tome

Eq. Guinea Libreville

Sao Tome and Principe

Kampala Congo

Gabon

Brazzaville

Kinshasa

Kenya Nairobi

Democratic Republic of the Congo

Kigali Rwanda Bujumbura

Victor

Burundi Tanzania

Dar es Salaam

Seyche

Luanda Floating LNG technology will unlock small and stranded gas reserves in the southern hemisphere – positioning sub-Saharan Africa as an LNG contender. Ross McCracken reports Moroni Malawi Angola

F

loating LNG (FLNG) is opening new offshore gas basins for LNG development in Africa. Producers are striking offtake agreements with portfolio players and traders, and sizeable long-term contracts are due to expire from 2020. This, the ownership structure of Africa’s new LNG production and the willingness of international oil companies to deploy new technologies will drive the commoditisation of LNG and cement its

Lilongwe Zambia

Lusaka

Mozambique

Mamoudzou Comoros Mayotte

growing role as such in the global trading energy. Antanarivo Uniquely, FLNG vessels will provide Zimbabwe the first liquefaction plants in Mozambique Madagascar and Cameroon and the technology is also expected to lead an expansion of capacity Botswana in Equatorial Guinea. Gaborone Italy’s Eni and its partners took a Pretoria finalMaputo investment decision (FID) on the Mbabane 3.4M Swaziland tonnes a year (mta) Coral FLNG scheme off Mozambique in June 2017. The project will be the first of this type to Bloemfontein

Major onshore projects planned in Sub-Saharan AfricaWindhoek are progressing more slowly than the continent’s FLNG Namibia projects

Harare of

Maseru Lesotho

South Africa

LNG World Shipping | January/February 2018

Cape Town

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Saint-Denis Réunion


AFRICA FLNG | 11

Africa FLNG projects confirmed and planned CAMEROON Cameroon FLNG

Vessel: Hilli Episeyo Start date: 2018 Status: Construction LNG output: 2 mta

EQUATORIAL GUINEA Fortuna FLNG

SENEGAL MAURITANIA Tortue Gas FLNG

Vessel: 1-2, TBC Start date: TBC Status: awaiting FID LNG output: 2.5 mta

Vessel: Gandria Start date: 2020 Status: FID imminent LNG output: 2.5 mta

MOZAMBIQUE Coral FLNG

Vessel: SHI-built, 238,700 m3 Start date: 2022 Status: Construction LNG output: 3.4 mta

REPUBLIC OF CONGO Marine 12

ETHIOPIA DJIBOUTI Ogaden FLNG

Vessel: TBC Start date: TBC Status: awaiting FID LNG output: 3 mta

Vessel: 1-2, TBC Start date: 2022 Status: awaiting FID LNG output: 1.2 mta

www.lngworldshipping.com

LNG World Shipping | January/February 2018


12 | AFRICA FLNG

have as much as 60% of its cost funded on a project-finance basis, backed by 15 international banks and guaranteed by five export credit agencies. Eni has signed an agreement with BP for the sale of all the LNG produced at Coral South for more than 20 years. In August, Equatorial Guinea’s Ministry of Mines and Hydrocarbons (MMH), Ophir Energy and La Compania Nacional de Petroleos de Guinea Ecuatorial nominated trading house Gunvor as its preferred LNG offtaker for the 2.2 mta Fortuna FLNG project. The deal takes the project an important step forward towards FID. Gunvor is committed to take the full contract capacity, which will be purchased on a Brent-linked, FOB basis for a 10-year term. Meanwhile, BP and Kosmos’ Tortue FLNG project offshore Mauritania and Senegal is progressing on the back of positive drilling results. In August, KBR of Houston, Texas was awarded contracts for pre-front-end engineering and design and project-support services for development of the 15 tcf Tortue/ Ahmeyim field. A string of large offshore gas discoveries in the region is sufficient to underpin multiple LNG projects and deliver BP’s stated ambition of developing a new West African LNG hub. However, Africa’s first FLNG deployment is likely to be in Cameroon. The 125,000 m³ Hilli Episeyo has been contracted by France’s Perenco Cameroon SA and Cameroon’s Société Nationale des Hydrocarbures to produce up to 2.4 mta of LNG from the offshore Kribi fields. Hilli Episeyo set sail from Singapore for West Africa in October 2017. The Cameroon project has some unique elements. It is the first conversion of an LNG carrier to an FLNG vessel, which shipowner Golar LNG undertook on a speculative basis. Conversions potentially offer a cheaper and quicker route to FLNG deployment than newbuilds. Product from the project will be sold to Russia’s Gazprom.

Two-speed development

There are also major onshore projects planned in Sub-Saharan Africa, but they are progressing more slowly than the continent’s FLNG projects. Mozambique LNG signed a sales and purchase agreement in September to supply Thailand’s national oil and

LNG World Shipping | January/February 2018

Mozambique plans onshore and offshore LNG-export projects. (Credit: Senorhorst Jahnsen)

The Cameroon project is the first conversion of an LNG carrier to an FLNG vessel

gas company PTT with 2.6 mta. Project operator Anadarko has also secured agreements with Maputo, allowing it to design, build and operate the marine facilities for its 12 mta LNG project. At the time of writing, Anadarko and its partners needed to secure further offtake agreements before progressing to FID. Tanzania also has substantial gas reserves earmarked for LNG development. However, the government there is proving to be less hospitable than in Mozambique. Tanzania’s gas ambitions received a blow in early July 2017 when the government decided to force all existing upstream investors to renegotiate the terms of their contracts and concessions. The Natural Wealth and Resources and the Natural Wealth and Resources Contracts Bills affect all parts of Mozambique’s oil, gas and mining sectors. FLNG, in contrast, is racing ahead as these projects’ smaller scale makes it easier to secure offtake agreements – often requiring a single buyer. Of note is the sale of FLNG-produced LNG to portfolio players and traders rather than to end-users: Coral to BP, Fortuna to Gunvor and Kribi to Gazprom. Moreover, operating companies are keen to get early experience of a new technology that offers the ability

Hilli Episeyo set sail from Singapore for West Africa in October

to exploit large, formerly stranded offshore gas assets – and that does this in a way that reduces the risk of the civil instability that can affect onshore developments. There is even the prospect of emerging intra-African trade. Ghana is expected to become Sub-Saharan Africa’s first LNG importer. The floating storage and regasification unit Hoegh Giant is slated to start a 20-year contract with Quantum Power from mid-year. This reflects, in part, the unreliability of gas supplies via the West African Gas Pipeline, which originates in Nigeria’s Niger Delta region, again a reminder of the enhanced security that offshore production requires in parts of SubSaharan Africa. FLNG developers’ willingness to sell to trading houses and portfolio players is reflected elsewhere in Africa too. Angola LNG, having overcome its technical difficulties, signed an agreement with France-based EDF Trading in March 2016. It followed this in September 2017 by signing separate deals with traders Vitol, Glencore and Germany-based RWE Supply and Trading. Angola LNG may prove a model for contract renewal as long-term deals move towards expiry for Africa’s legacy LNG producers. Contracted volumes from Nigeria’s LNG plants will fall sharply in coming years, from 20.75M tonnes in 2017 to 9.6M tonnes in 2026. This frees up significant volumes to be re-contracted on new terms, sold to new buyers or traded spot. There is already a clear shift in balance between Nigerian contracts signed for delivery into a specific national market and those with portfolio players. The proportion is 63% to specific enduse markets versus 37% to portfolio players. Based on existing contracts, by 2025 this is ›››

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AFRICA FLNG | 15

››› reversed to a 36% to 64% ratio. Direct contracts with end-user markets may be renewed, but portfolio players appear more willing to contract forward.

Equity structure

The upstream involvement of international oil companies in Nigeria’s LNG projects lends itself to contractual arrangements with portfolio players and trading houses, as opposed to Africa’s other main producer, Algeria, whose sales and production are controlled by state-owned Sonatrach. Notably, all of Sonatrach’s current contracted volumes are with specific end-use markets, all of which are in Europe and Turkey.

FLNG vessels will provide the first liquefaction plants in Mozambique and Cameroon and lead an expansion of LNG capacity in Equatorial Guinea

However, Algeria, too, will see contracts expire, with contracted volumes falling from 15.4M tonnes in 2017 to just 5.6M tonnes in 2020 and then to 2.7M tonnes in 2024. Sonatrach, which has already said it will consider shorter-term contracts, needs to secure both its pipeline and LNG supplies to its principal markets. However, it faces increasing competition in the Atlantic Basin, not just from the US and Qatar, but also from the traders to which the new West African producers are contracted. The new FLNG projects mean that the East and West African LNG hubs are emerging on a model similar to Nigeria’s, but with fewer onshore risks. Joint ventures of international oil companies develop the upstream project, carrying minority shares held by less technically able national hydrocarbons companies. Starting small with FLNG, the new East and West African trading hubs could expand hugely from 2025, with largerscale onshore developments, providing a rich new dimension to global LNG trade. Ross McCracken is managing editor of Platts Energy Economist. A version of this article first appeared in S&P Global Platts’ Dawn of a global commodity: LNG-trading transformed

Ross McCracken: A string of large offshore gas discoveries is underpinning multiple African LNG projects

AFRICA – AN LNG STAR IS REBORN

50 mta = 2021

33.5M = 2016 38.5M = 2012

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Africa has been at the heart of LNG trade since its inception. The first supply agreement was signed between Algeria and the UK as far back as 1962. Libya soon joined the industry and, by the early 1980s, Algeria was the world’s largest LNG producer. By 2017, Africa had six countries with liquefaction capacity – Algeria, Libya and Egypt in North Africa and Nigeria, Equatorial Guinea and Angola in the Sub-Saharan region. However, LNG volumes have been falling. In 2016, Africa exported 33.5M tonnes, still 12.7% of the global market, but down from 38.5M tonnes in 2012. The fall reflected a multiplicity of problems: conflict in Libya, a dearth of gas in Egypt, technical problems in Angola and persistent social unrest in the Niger Delta, the source of Nigerian LNG plant’s feedstock. However, the tide now appears to be turning. Africa is forecast to see volumes rise above 50 mta by 2021, reflecting the recovery of legacy producers and the emergence of new African LNG. It is the nature of the new capacity coming on stream that will drive the commoditisation of LNG. LNG

LNG World Shipping | January/February 2018


LNG-TO-POWER PROJECT PLANS Projects using FSUs or FSRUs, 2016 - 2023

MARSAXLOKK LNG NEEDED > 0.1979 START > 2017

JORF LASFAR LNG NEEDED > 4.896 START > 2021

MONTEGO BAY LNG NEEDED > 0.272 START > 2016

ABIDJAN

COLON LNG NEEDED > 0.544 START > 2018

LNG NEEDED > 0.911 START > 2018

CARTAGENA LNG NEEDED > 3.54 START > 2017

MOMBASA

TEMA SERGIPE LNG NEEDED > 3.672 START > 2020

LNG NEEDED > 0.734 START > NO DATE

Endeavour LNG NEEDED > 1.35 START > 2018 WAGP LNG NEEDED > 1.836 START > 2019

WALVIS BAY LNG NEEDED > START > NO DATE

RICHARDS BAY

CONCEPCION BAY LNG NEEDED > 1.496 START > 2020

LNG World Shipping | January/February 2018

0.49

LNG NEEDED > 4.896 START > 2023

COEGA LNG NEEDED > 2.448 START > 2023

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Source: BMI Research, October 2017 Graphic: Richard Neighbour Research: Karen Thomas

TOTAL

LNG needed, bcm3

41.1

JHANG LNG NEEDED > 1.986 START > 2019

MEGHNAGHAT COX'S BAZAR LNG NEEDED > 1.836 START > 2019

HONG KONG

LNG NEEDED > 1.469 START > 2019

LNG NEEDED > 3.128 START > 2020

BATANGAS LNG NEEDED > 0.49 START > 2020

YANGON LNG NEEDED > 2.448 START > 2020

MEDAN LNG NEEDED > 1.958 START > 2020

BALI LNG NEEDED > 0.49 START > 2016

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LNG World Shipping | January/February 2018


Indonesia is likely to become an LNG net importer by 2019-2020

18 | RUNNING HEAD sub

Cheap gas creates new LNG-import markets in Asia A group of emerging Asian LNG importers has planted the seeds of a new global LNG trading landscape, as they feed off low prices in an oversupplied market and accelerate national energy reforms to increase the use of gas, writes Hong Liang Lee

I

n Asia, developing economies such as Indonesia, Thailand and the Philippines have drawn their blueprints for the greater use of LNG in their energy mix. Other countries like Bangladesh and Pakistan are looking to secure more reliable and cleaner forms of energy to address chronic power shortages. The Asian market remains under-contracted considering how rising populations and greater industrialisation have created a growing hunger for energy in the region. According to Anadarko Petroleum general manager Rajnish Goswami, by 2030 the Asian market will need 114M tonnes of new LNG supply, and

demand from the emerging markets will grow by 50%. Part of the demand can be met by Mozambique, one of the world’s newest suppliers, with 50 mta of availability, Mr Goswami said. Galway Group head of business development Mangesh Patankar predicts that by 2025 demand for LNG in Asia will reach 290M tonnes a year (mta). He expects emerging buyers in the region, such as Indonesia, Thailand, Malaysia, Singapore and Pakistan, to import a total of 60 mta in 2025, making up 79% of Asia’s LNG imports, compared with 21% from the region’s traditional buyers China, India, Japan, South

LNG World Shipping | January/February 2018

Singapore imported approximately 2.5 million tonnes of LNG in 2016 but the existing facilities can already cater import volumes of up 9 million tonnes

Korea and Taiwan. The growth of LNG imports in emerging Asian nations, however, needs to be backed by investments in multiple elements of the gas value chain, including shipping assets and bunkering operations, onshore and offshore terminal infrastructure, breakbulk and LNG trucking facilities, cross-country pipelines, gas distribution networks and CNG stations.

South Asia demand

In South Asia, Bangladesh is set to join India and Pakistan as a major LNG importer, a significant development that can help to ease global oversupply. In 2016, only India

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Asia AREA REPORT | 19

and Pakistan imported LNG in this region, absorbing a combined 25M tonnes. Pakistan itself is a new LNG importer, with its first cargoes arriving in 2015. A second terminal with its floating storage and regasification unit (FSRU) provided by BW, is scheduled to come on stream in 2018. A third FSRU newbuilding on order to Höegh LNG was planned for 2018-2019 – but in November, it emerged that the consortium behind it has been dissolved, after French energy firm ExxonMobil pulled out of the project. Before that development, Pakistani official figures put the country’s LNG demand at 30M tonnes in 2022, up from 3.4M tonnes in 2016. The addition of Bangladesh as an importer could see South Asia take in 80 mta by 2030, up from 22 mta in 2016, with Bangladesh alone estimated to import around 17.5 mta by 2025. Two floating LNG terminals are being developed at Moheshkhali island in Bangladesh in the Bay of Bengal, the first slated to start importing in 2018, a project developed by US-based Excelerate Energy Bangladesh. A second import terminal is being jointly developed by Summit Group and General Electric with construction scheduled to start in September 2018. The two terminals will have a combined capacity of 7.5 mta. Two more FSRUs are planned in Bangladesh with India’s Reliance Group expected to get involved in at least one project. State-owned PetroBangla is also looking to build a small-scale LNG terminal in Chittagong with a view to completion in 2018.

Southeast Asia growth In Southeast Asia, Energy World is building a 3 mta regasification terminal in Pagbilao, the Philippines,

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scheduled to start in 2019-20. Myanmar is another emerging economy that has huge potential to become an LNG importer, but the country needs a more transparent regulatory framework before stakeholders can feel confident about investing there. “The ability of the government to see through projects is another question,” Mr Patankar said. Indonesia is expected to become an LNG net importer by 2019-2020, according to Pertamina general manager LNG sales Irma Surya. Thailand has an ambitious target to secure 35 mta of LNG imports under long-term contracts by 2036, up from today’s 5.2 mta. Among the various projects across the Asian region, supportive governmental polices are vital to maintain the LNG industry’s long-term prospects, according to International Energy Forum secretary-general Dr Sun Xiansheng. “The role of policy support is very important to ensure the demand for LNG in Asia,” Dr Sun said. The city-state of Singapore is a prime example of having supportive policies aimed at elevating the country to the

China’s demand for natural gas could reach 330Bn m3 by 2020 from 206Bn m3 in 2016

position of regional gas hub by building up infrastructure and introducing new business initiatives. Today about 95% of Singapore’s electricity generation comes from power plants fired by natural gas, up from 26% in 2001. Singapore imported some 2.5M tonnes of LNG in 2016 but the existing facilities can already cater for import volumes of up to 9M tonnes, according to Galway Group’s Mr Patankar. “Singapore’s infrastructure can meet demand for the future. Additionally Singapore is planning to set up an FSRU on the east coast as a backup facility in case of downtime at the existing terminal,” Mr Patankar said. The decline in piped gas imports from Indonesia and Malaysia will help make Singapore increasingly reliant on LNG.

Wider seaborne trade

BELOW: Emerging Asian buyers including Malaysia will import a total of 60 mta in 2025, the Galway Group estimates

From a shipping perspective, the biggest change under way is that LNG is becoming a globally seaborne traded commodity due to the change in its pricing structure, according to Bernhard Schulte


20 | AREA REPORT Asia

Shipmanagement corporate director Angus Campbell. “We have seen the break in the link with oil on LNG prices, and that is making natural gas a more competitively priced fuel, which is encouraging Asian countries to establish LNG import facilities such as FSRUs,” he said. Mr Campbell noted how the introduction of an FSRU can, in turn, prompt the existing pipeline producers to reconsider their pricing and make the LNG market more competitive overall. “As we look at environmental concerns, the decrease in the use of coal for power generation and the increase in the supply of natural gas as a comparatively clean fuel are reasons why we are seeing various countries in Asia establishing more LNG receiving terminals,” he said. Société Générale managing director Ben Arnott forecast that 20 new countries will be importing LNG by 2025 and that “a number of them are in Asia”, driven by an increasing urge to generate power via LNG. However, he adds that the

import volumes are likely to be small, in the range 0.5 to 1 mta per project, and that an aggregation of many small buyers may be necessary by then. This means that long-term LNG contracts under standard terms seen today may not fit the model of the future. Meanwhile, Mr Arnott said, about 80 mta of long-term contracts are expected to mature over the next four to five years and up to 140 mta by 2025. “FSRUs are also a relatively new market, with 30-35 prospective projects in regions including South Asia and Southeast Asia. The projects are cost competitive at 30-45 US cents per MBtu depending on the throughput, and they are considered a flexible solution for underserved markets,” Mr Arnott said. “The FSRU’s portability also offers greater investment protection.” What’s more, Mr Arnott pointed out, financing is readily available for FSRU projects as “banks are not investing in coal – and that includes my own bank – and the oil and gas projects”.

China and India

India faces serious obstacles to expand its LNG demand growth due to logistics bottlenecks across the country’s pipeline and terminal infrastructure

BELOW: Singapore can import up to 9 mta of LNG

The giant markets of China and India obviously cannot be ignored. Wood Mackenzie head of Asia gas and LNG Kerry-Anne Shanks observed that China’s demand for natural gas could reach 330Bn m³ by 2020 from 206Bn m³ in 2016. The projected LNG demand growth is underpinned by an agreement inked in May this year for China to buy gas from the US and to enter long-term supply deals with American operators. “It was the clearest signal to date of the mutual support by US president Donald Trump and Chinese leader Xi Jinping for increasing bilateral LNG trade. Before the two leaders met last year, China’s importers had yet to commit to long-term supply directly from US projects,” Ms Shanks said. The deal with the US is in line with Beijing’s aim to increase the role of natural gas in the country’s energy mix to 8-10% by 2020 from 6% in 2016. “Wood Mackenzie estimates that LNG will capture a third of China’s gas demand growth out to 2025,” Ms Shanks said. India’s strategic priority is to increase its share of gas in its energy mix to 15% by 2021 from 6.5% today and LNG demand is projected to reach 30 mta by 2022, almost double the current throughput, according to data from Platts. However, India faces serious obstacles to the expansion of its LNG demand due to logistics bottlenecks across the country’s pipeline and terminal infrastructure. There has been some improvement of India’s facilities as the Petronetoperated Dahej terminal has increased its capacity to 15 mta from 10 mta. Moreover an additional 14,000 km of domestic gas pipelines is under construction or proposed, adding to the existing 16,000 km. LNG

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22 | AREA REPORT Asia

A TALE OF TWO LNGIMPORT MARKETS – THAILAND VERSUS INDONESIA Different dynamics are shaping LNG-import demand in Indonesia and Thailand – two of Asia’s most exciting growth markets. Hong Liang Lee reports

I

ndonesia faces a unique challenge to secure and distribute gas for its expanding population. The country has a voracious appetite for energy and its people are spread over an archipelago of more than 17,000 islands. The struggle to provide a larger percentage of clean energy across the country is real and efforts to do so are weighed down by an absence of the requisite infrastructure, slow development and the lack of a monolithic grid of either pipelines or wires to interconnect a vast number of islands. With gas demand projected to grow at an average annual rate of 5% over the next 10 years and with power plants absorbing the main chunk, Indonesia will rely on gas for 50% of its total energy needs, up from 23% in 2015, according to Pertamina general manager LNG sales Irma Surya. The country’s state-owned energy firm is also expecting to become a net importer of LNG by 2020 in view of rising gas demand reaching an expected 144M m3/day in 2035 from 100 m3/day in 2017. “Indonesia will become an LNG net importer by 2019-2020 for the first time,” Ms Surya told LNG World Shipping on the sidelines at the Gas Asia Summit in Singapore. She added that the country’s preference is for gas for a greener environment in a nation whose industrial growth is continuing alongside its rise in population. But as many islands individually cannot support the establishment of the infrastructure needed to provide a base for a transition to LNG, Pertamina believes that small-scale projects and

LNG World Shipping | January/February 2018

FSRUs are feasible solutions that can reap almost immediate results. “Pertamina’s long-term infrastructure development plan is to make gas supply accessible to the many islands of the country. We have seen growth in small-scale LNG projects, but we still face challenges in completing the logistics chain and providing acceptable prices to end-users,” Ms Surya said.

Fuel switch

There has been resistance from consumers to switch from their current fuel source, mainly diesel, due to the higher cost and uncertainties in the availability of alternate energy supplies, including LNG. In addition, the country lacks a comprehensive network of virtual pipelines needed for a more efficient inter-island distribution, according to Ms Surya. And the availability of gas is uneven across the archipelago, with a surplus in the east and deficits in the west and south. “We are also looking at FSRUs as a cheaper option compared with building onshore facilities,” Ms Surya said. She noted that Pertamina aims to hook up a new FSRU by securing supplies from Mozambique, but she declined to share more details. It was reported earlier that Pertamina has partnered Sojitz and Marubeni to build a new FSRU to support the Marubeni-led Jawa 1 project in Cilamaya, West Java province. Indonesia currently operates an FSR-FRU project in Bali. Mangesh Patankar, head of business development at Galway

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Asia AREA REPORT | 23

LEFT: LNG exporter Indonesia expects to become a net importer by 2020 (credit: Min Rong) BOTTOM: Thailand needs more long-term LNG contracts worldwide (credit: Porrasak Ngamsompark)

“Indonesia has untapped offshore oil and gas, but softening oil prices have curtailed offshore exploration and production”

Group, said a small-scale LNG project is a viable solution to facilitating gas supply across the country. He noted that Indonesia also has huge untapped offshore oil and gas resources, but softening oil prices have significantly curtailed sea-based exploration and production activities. “If upstream developments do not materialise, the country will become a net importer of gas in the next decade,” Mr Patankar said.

Thai hopes

Thailand, Asia’s new emerging LNG import market, has laid out ambitious goals for becoming a major LNG player by way of securing more long-term import contracts as the country faces dwindling domestic gas production and rising energy demand. “Thailand relies 70% on gas to generate power but domestic production will soon decline at a rapid pace and we will need to import more and more LNG,” said Porrasak Ngamsompark, acting director for the LNG management bureau, department of mineral fuels, ministry of energy, Thailand. Apart from a diminishing national output, Thailand is also facing shrinking upstream oil reserves and has an uncertain relationship with neighbouring Myanmar concerning pipeline gas imports due to the latter’s growing domestic market. With Thailand importing 5.2 mta of LNG under four long-term contracts today, it is thinking about enlarging its import sources with the aim of securing 35 mta by 2036. Qatargas is supplying 2 mta of LNG to Thailand under a 20-year contract. Malaysia’s Petronas is delivering 1 mta to Thailand in 2017 and 2018, and will increase the volume to 1.2 mta from 2019 as part of a 15-year contract. BP and Thailand have inked a 20-year contract for 1 mta, and Shell has a contract to supply 1 mta over 15 to 20 years. Thailand is also stepping up spot imports, which brought in 2.9M tonnes in 2016. www.lngworldshipping.com

“We need more long-term LNG contracts from around the world. Currently we are looking at a long-term FSRU deal with Mozambique,” Mr Ngamsompark said. The LNG supply will come from Mozambique’s Rovuma Area 1 offshore project operated by Anadarko Petroleum Corp. With approximately 50 mta of availability, Mozambique is seen as the new emerging LNG supplier to the global market. To meet the aim of a seven-fold increase in LNG import volumes to 35 mta by 2036, Thailand is looking to double its annual regasification capacity to 20 mta from the current 10 mta over the next decade. State-owned corporation PTT is studying a proposal for the construction of a storage and distribution LNG terminal with a capacity of around 3 mta in neighbouring Myanmar. The terminal will facilitate onshore LNG transportation to Thailand. PTT may soon no longer be the only LNG importer in Thailand as compatriot Electricity Generating Authority of Thailand has received approval to build a 5-mta FSRU in the Gulf of Thailand. These plans are in line with the government’s goal of ensuring that 70% of LNG imports are from long-term contracts and the remaining 30% from the spot market, according to Mr Ngamsompark. The serious attempts made by Thailand to bolster its LNG imports came despite the country being one of Asia’s biggest oil producers alongside China, Indonesia and Malaysia. The softening of crude oil prices since 2014 has led to an average annual base decline of around 7% within Thailand’s existing oil fields, according to data from analyst Wood Mackenzie, forming the basis for the drive for greater LNG imports to the country. “Our LNG infrastructure capacity will need to double from now to 2030 and the government is calling on foreign investors to help build up the infrastructure,” Mr Ngamsompark said. Thailand’s ambition is to become the LNG hub for the countries of the Association of Southeast Asian Nations, he concluded. LNG LNG World Shipping | January/February 2018


24 | BUNKERING

WAS 2017 A TURNING POINT FOR LNG BUNKERING? There has been a deluge of LNG bunkering developments in 2017, and none more notable than the announcement earlier this month by CMA CGM. The French liner operator specified dual-fuel engines for nine new 22,000 TEU container ships, the largest such vessels ever ordered

Coralius bunkers the LNG-powered multigas carrier Navigator Aurora off Sweden

E

ach of the breakthrough ships will be powered by a pair of the largest gas-burning engines ever built and boast an 18,600 m3 LNG membrane bunker tank. This tank is five times larger than any specified for a previously contracted LNG-powered ship and marks the first use of a non-Type C containment system in LNG bunkering. LNG bunkering news in 2017 has featured the appearance of the first purpose-built LNG bunker vessels and significant infrastructure investments, including by several energy majors and key

LNG World Shipping | January/February 2018

regional government and port authorities, in addition to newbuilding orders for some of the largest-ever gas-fuelled ships.

Shell to the fore

Shell, already the leading global player in LNG production and shipping, is also the top gas company supporting LNG bunkering. In August, the energy major took delivery of the 6,500 m3 Cardissa, an LNG bunker tanker that is being operated from its base in Rotterdam. Cardissa enables ship fuelling by means

of ship-to-ship (STS) transfers, a much quicker and more efficient operation than jettyside truck-to-ship (TTS) bunkerings. Shell’s Rotterdam LNG STS customers confirmed so far include Containerships, cruise shipowner Carnival, dredger owner Van der Kamp, the Aframax newbuildings on order to Russian shipowner Sovcomflot and a new transatlantic car carrier pair that Siem is about to order, for charter to Volkswagen. Carnival has seven 180,000 gt, gaspowered cruise ships on order and, to date, Shell has secured contracts to bunker four of them. One will be fuelled in Rotterdam,

www.lngworldshipping.com


BUNKERING | 25

one at a western Mediterranean port and the remaining two at a US southeastern coast location. Shell will charter a 4,000 m3 LNG tanker recently ordered at the VT Halter Marine yard in Mississippi for its North American bunkering operations. Designed as an articulated tug barge (ATB), the bunker vessel is set for completion in Q1 2020. Several new LNG production facilities poised to come onstream in Georgia and Florida will enhance fuel availability. Siem is likely to be another customer of the ATB, as at least one of its new car carrier pair is set to fuel in the US. Each Siem car carrier will be provided with a 3,000 m3 IMO Type C bunker tank while each Carnival cruise ship will have a 3,600 m3 tank of the same design. Full tanks will enable 14 days of gas-only operation for all the ships. Earlier this month Shell and Anthony Veder agreed to co-operate on the conversion of the Dutch shipowner’s 7,500 m3 coastal LNG carrier Coral Methane into a bunker vessel. Coral Methane could be utilised in Carnival’s Mediterranean cruise ship bunkering routine as the converted bunker tanker is earmarked for operations in this area as well as the southern part of the North Sea. Shell has also been in the news in recent months in connection with LNG bunkering in Singapore and on Europe’s inland waterways. Singapore’s Maritime and Port Authority (MPA) is implementing measures to ensure that LNG fuelling is one of the services available from what is already the world’s busiest bunker port. FueLNG, a Shell/Keppel joint venture, is one of two companies approved for LNG bunkering operations in Singapore and recently carried out the port’s first internal movements of the cryogenic liquid. Between July and September 2017 FueLNG carried out a series of TTS transfers of LNG to Golar’s Hilli Episeyo as part of a programme to test the converted floating production vessel’s gas-handling systems prior to entry into service.  FueLNG has also secured contracts from Keppel Smit Towage and Maju Maritime to provide LNG bunkers for two dual-fuel LNG tug newbuildings that will be employed in Singapore harbour. The service will commence in 2018 when the tugs are commissioned.  Rotterdam is also the focal point for Shell’s ambitions in the bunkering of European gas-powered inland waterway vessels. In August 2017 the company agreed to long-term charter a 3,000 m3 LNG

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bunker barge with four Type C tanks that a Victrol/CFT joint venture will build for the purpose and base in the port. A potential customer of the bunker barge is Antwerp-based Plouvier Transport, namely its 15 110 m inland waterway tankers currently under construction for charter to Shell. The owner also has the option of fuelling the vessels at the breakbulk jetty of Rotterdam’s Gate terminal. Rotterdam has been offering a 10% discount on gross port fees to vessels that bunker on LNG since December 2015.

Tanker time

Shell’s LNG bunker customer Sovcomflot highlights the growing attractiveness of gas fuel for operators of larger, deepsea tankers. Until recent months the biggest tank vessels for which dual-fuel had been specified were intermediate-size ships of up to 25,000 dwt used on local and regional Baltic and North Sea trade routes. In March 2017, Sovcomflot specified low-speed, dual-fuel engines for four Aframax crude/product tankers ordered at Hyundai Samho. AET, part of the MISC group, followed suit a few weeks later, contracting four LNG-powered Aframaxes at Samsung. Two of these will go on charter to Statoil and be employed in the North and Barents Seas. Statoil will also charter two LNGfuelled 154,000 dwt Suezmax shuttle tankers that Teekay ordered in August 2017 at Samsung. Gas4Sea has been contracted to fuel the pair using Engie Zeebrugge, its Zeebrugge-based 5,000 m3 LNG bunker vessel that was delivered in April 2017. Rosneft of Russia is the latest owner to specify LNG fuel for its large tankers, ordering five dual-fuel Aframax tankers of 114,000 dwt that the Zvezda yard will build with technical assistance from Hyundai. Each of the gas-powered Aframax and Suezmax tankers will be provided with a pair of deck-mounted Type C bunker tanks. LNG has also come onto the radar as a propulsion fuel for larger bulk carriers. ESL Shipping will soon take delivery of Viikki and Haaga, a pair of 26,000 dwt LNG-powered bulkers that will operate in the Baltic and be bunkered by Skangas. In Korea, Hyundai Mipo is poised to complete a 50,000 dwt LNG-fuelled bulk carrier for Ilshin Shipping to transport limestone domestically. Polaris Shipping is set to move the bar higher. In October 2017 the Greek owner confirmed orders for 10 LNG-ready very large ore carriers (VLOCs) of 325,000 dwt

at Hyundai Ulsan. Although the propulsion arrangement is yet to be specified, the bunker tank capacity for such vessels will need to be on the high side. Skangas, the LNG supplier for the ESL bulkers, itself took delivery of a purpose-built LNG bunker vessel in mid-2017. Chartered from a Veder/Sirius Shipping joint venture, the 5,800 m3 Coralius is opening up new STS bunkering opportunities for Skangas, including at-sea transfers. In November 2017, Skangas signed a memorandum of understanding with Titan LNG covering co-operation in the provision of LNG to customers in the North and Baltic Seas. Titan will introduce its first LNG bunker vessel, the FlexFueler1 pontoon, in mid-2018 to enable the delivery of LNG fuel to vessels throughout the Amsterdam, Rotterdam and Antwerp region.

Future proof

While LNG fuel is unlikely to be anywhere near as popular as low-sulphur distillate oils and exhaust scrubbers as a means of meeting IMO’s tightening regime governing ship atmospheric emissions, it still has a bright future. Even if LNG wins only 5% of the marine fuel market, that means that 2,750 vessels out of a global fleet of some 55,000 ships of 500 gt and above will be running on the fuel six or seven years from now. As indicated by the events of 2017, significant investments in LNG bunkering infrastructure are being made to enable realisation of the environmental and operating cost benefits of using cleanburning natural gas as marine fuel. And, as industry is set to build on this turning point year, the best is yet to come. LNG

Credit: Tom Parnell

LNG World Shipping | January/February 2018


26 | ICE-CLASS RUNNING HEAD OPERATIONS sub

Ice compression creates a high static load on ships’ side structures

LNG carriers toughen up to survive in Arctic waters Icebreaking LNG carriers fixed to the Yamal LNG project will undergo two surveys within five years. Russian Maritime Register of Shipping head of research Maxim Boyko explains why

Maxim Boyko: quality coatings matter

A

cross the whole range of possible ship operating conditions in ice, the ship’s hull must withstand continuous movement in broken ice and in ice channels, in ramming mode and icecompression mode. The first three modes are mainly characterised by dynamic impacts to hull structures as ice impacts against the ship’s side. This phenomenon is relevant to the bow and, when the ship moves astern, to the aft parts of the hull. Ice compression is characterised by a high static load on the side structures. The most frequently detected damage to hull structures is a permanent deflection of side structures, which can be localised, forming the local deformations of side shell plating between stiffeners and ribs between stiffeners. Sometimes, these can be on a larger scale, involving large areas of the side structures, such as plating and stiffeners, which become plastically deformed. When performing a survey

of an ice class ship, the Russian Maritime Register of Shipping surveyor will assess this damage to determine whether repairs are necessary. In this context, even at the ship design stage the register’s requirements consider probable damage to ship structures, which ensures that the construction remains safe, even if local separate damage occurs. Interaction with ice can damage the paint coating of the side structures, causing corrosion of the structure. This makes it important, for safe navigation in ice, to maintain the quality of coatings, and to determine the proper corrosion and abrasion margins.

Propulsion

Another important point is the safety of propeller blades under ice impact. If the blade breaks on a ship in the icebreaker-led convoy it creates time and cost issues and increases the danger of ship damage by ice. That is why we have developed our rules, paying close attention to modern calculation technologies and the model testing of propeller

LNG World Shipping | January/February 2018

blades. The Russian Maritime Register of Shipping has established rules that determine the minimum dimensions of propeller blades and minimum required propulsion power based on typical load scenarios applicable to Arctic navigation. Also relevant to the machinery is the strength of the podded propulsion units. The design ice loads on such units must be calculated properly at the design stage to ensure that the pod structure and its connection to the hull has the strength to withstand ice loads. We have learned a lot from our experience at the Yamal project. We have gained unique feedback and data by applying ice-class rules to high-iceclass LNG carriers of nonconventional hull form and dimensions. This has helped us to expand our knowledge into non-conventional Arctic ships. This includes the application of high-tensile steels in extremely cold ice conditions, winterisation of deck equipment and the implementation of interesting structural design solutions. Every aspect is

carefully assessed to consider the safety of the design. The result of the research has given us the opportunity to optimise the required number of drydocking surveys. An analysis of 25-plus years of data covering the annual docking of icebreakers and ice-class ships shows how the precision of the requirements for hull and propulsion systems, as defined in the Rules for the Classification and Construction of Sea-Going Ships, has ensured the long-term safe service of vessels of the given class. Based on this analysis, since 2016 the icebreakers and ice ships meet similar requirements for in-dock surveys as other sea-going ships. So instead of an annual survey in dock, icebreakers and ice-class ships now undergo two in-dock surveys of the underwater part of the hull and steerable propellers in five years. This also applies, of course, to Arctic LNG carriers. LNG Maxim Boyko is head of research at the Russian Maritime Register of Shipping

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Herøya hosts a landmark LNG transfer In October, a landmark transfer of LNG took place at the Norwegian port of Herøya, from the 15,600 m3 small-scale LNG carrier Coral Energy to the terminal on shore, using the universal transfer system

T

he first transfer to use universal transfer system (UTS) was developed between Trelleborg, Connect LNG and Gas Natural Fenosa. Trelleborg describes the UTS as the first full-scale market-ready floating solution for LNG transfer between ship and shore. UTS is a plug-and-play solution that requires no modifications to the LNG carrier and removes the need for costly, environmentally intensive dedicated harbour and jetty structures. This addresses the infrastructure challenge that hinders LNG market growth. Although demand is growing and gas is available, the cost of developing transfer infrastructure can cut the feasibility of power generation and terminal projects.

www.lngworldshipping.com

The UTS brings the infrastructure to the carrier, reducing the need for extra construction and enabling transfer in waters that are too shallow for carriers or too deep to build a jetty. Gas Natural Fenosa and Connect LNG have formed a strategic partnership to market the UTS, which “enables ports with shallow draughts to import LNG cargoes”, said Connect LNG managing director Morten Christophersen. “It means the limit is the draught of the LNG-carrying vessel.” Connect LNG selected Cryoline LNG hoses from Trelleborg’s oil and marine operation, which are attached to a floating platform designed to manoeuvre offshore to meet a vessel, rather than requiring it to moor at shore. The inner cryogenic hose has multiple layers of polymeric film and woven fabric, all encapsulated between two stainless steel wire helices – one internal and one external. The film layers provide an impermeable barrier while the mechanical strength of the hose comes from the fabric. The outer protective hose uses flexible rubber-bonded technology for high resistance to fatigue and harsh environments. The hoses incorporate fibre-optic technology to measure temperature in real time during cooldown to the necessary temperature to received LNG and while excess liquefied gas is flushed from the hose at the end of a transfer. Monitoring the temperature throughout the hose minimises boil-off, making sure gas is only transferred when the hose is cold enough, giving the operators confidence that a safe transfer has occurred. Trelleborg’s marine systems operation also supplied its USL 8810 universal safety link, which allows a single operator to monitor and control the transfer process, keeping measurements within safe criteria. This also allows for a safe, automatic shutdown if need be. A triple fibre optic, five pin SIGTTO and pneumatic system also enables all-round flexibility for the platform for any visiting vessel. To absord berthing impact against the larger LNG vessel before attachment, the UTS employs Trelleborg’s marine systems operation’s Sea Guard fenders at its front, which the company says have a durable, non-marking finish and low maintenance. Profiled sections at the rear of the UTS, to the left and right of the hose reels, allow tugs to push it from shore to the operating location, where the LNG ship moors. Super Cone fenders reduce the impact of these manoeuvring vessels on the UTS. LNG

LNG World Shipping | January/February 2018


30 | CARGO MONITORING

Shipowners to improve LNGC cargo controlroom ergonomics LNG carriers may deal with one homogeneous cargo but transporting large quantities of this cryogenic liquid at its boiling point makes their cargo-handling operations more complex and riskier than those on other tankships, writes Mike Corkhill

A

dding to the challenges that confront officers responsible for cargo-handling and machinery operations on LNGCs are utilisation of cargo boil-off gas (BOG) as propulsion fuel, these ships’ high cargotransfer rates and the introduction of new cargo containment and propulsion systems, as well as new ship types such as floating storage and regasification units and bunker tankers. LNGC cargo and machinery operations need to be controlled and monitored in an integrated manner to ensure safe, efficient ship operations. Marine technology firms such as Kongsberg, Honeywell, Emerson and Yokogowa have helped LNGC owners to deal with increasingly complex ship operations by developing integrated automation systems (IASs).

The main functions of an IAS are sensing, monitoring, alarm and control and its basic components are engineering work stations, the control network, distributed and scalable controllers and the human/machine interface in the form of supervisory computers with mimic diagram screens in the cargo controlroom (CCR). An independent emergency shutdown (ESD) system is integrated with the cargo-control system (CCS) through the hardware and software of both. The IAS enables simultaneous oversight of boiler and power management, cargo loading/unloading operations, custody-transfer measurement, cargo containment-system control, cargo ESD, BOG control, ballasting operations and alarm management. It also incorporates open

Shipboard cargo monitoring and control starts on a training simulator

LNG World Shipping | January/February 2018

www.lngworldshipping.com


CARGO MONITORING | 31

interfaces to allow the supervisory computers to access trend data, messages and process data. LNG carriers use among the most sophisticated IASs in commercial shipping. A typical vessel hosts upwards of 500 data collection points that gather readings from gas detectors and pressure, temperature and tank level sensors. An IAS with 3,000 digital input and output modules is usual for a modern ship. The system operates myriad hydraulically controlled valves and regulates the flows of LNG and gas vapour throughout the ship. IAS suppliers aim to make use of complex algorithms and computations and present crew with simple, understandable recommendations that require straightforward, unambiguous responses.

Ergonomic focus

The Society of International Gas Tanker and Terminal Operators (SIGTTO) provides guidance on industry best practice to a worldwide membership of gas carrier and terminal operators. It established a new human element committee during 2017 to consider competency and training, design and ergonomics and the human element in incident investigation. Shipboard experience provides valuable lessons for the industry. SIGTTO is quick to study the details of incidents and near misses on ships and at its members’ terminals to understand what went wrong and to improve the industry’s rigorous safety regime. In recent years, investigations into LNG carrier ship/shore interface mishaps have revealed difficulties in interpreting cargo control room (CCR) screens and alarms. Misinterpretations can prompt incorrect responses and, sometimes, a reluctance to act for fear of the consequences of being over-zealous. SIGTTO therefore decided that its new committee should focus on gas ship CCR design and ergonomics. It established a working group to consider the topic. At the committee’s third meeting in August, the CCR ergonomics working group identified alarm management as its initial focus. The group is prioritising cargo alarms as per the IMO Code on Alerts and Indicators 2009, reviewing the ship-shore checklist and highlighting the importance of safety-critical systems and the timely activation of ESDs. Once it has completed the alarm-management task, the CCR working group will consider the layout of workstations and positioning of mimic screens in the CCR, along with the content and layout of the screens. The IMO Code on Alerts and Indicators 2009 identifies four categories of alert: emergency alarm, alarm, warning and caution. Emergency alarms and alarms require immediate action to be taken, whereas warnings and cautions alert seafarers to changes in conditions to which they may need to respond, to prevent a hazardous situation. The code is a generic maritime instrument,

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covering all types of ships and with the emphasis on alarms relating to propulsion machinery and navigational devices rather than those for cargohandling equipment. Although it lists the types of cargo alarms utilised on gas carriers, the code does not specify the alarm categories for these devices or name the ship operational situations in which alarm prioritisation may be relevant. One example of where the lack of alarm prioritisation can be confusing on gas carriers is the “cargo pump low amp” alert. This can be activated whether the pump is inactive or active. In the former case, this alert makes perfect sense and has the status of a caution. However, if the pump is operational and cargo handling is underway, this alert constitutes an alarm that requires immediate action to find and respond to the cause of activation. SIGTTO’s working group is aiming to complete draft guidance on gas ship alarm prioritisation by early 2018 and, once the society’s human element committee has approved the guidelines, to consider other CCR matters.

Moss gas detection system, BW Boston (credit: K Thomas)

Other ergonomic challenges

The lack of co-ordination between shipyards, naval architects and IAS suppliers can also hinder a gas carrier’s cargo monitoring and control equipment from achieving its optimal performance. This is especially true when a series of ships is ordered and stems from the characteristics of today’s newbuilding contracts. Yards contract IAS suppliers to provide the same equipment, set up in the same way, for each ship in a series of gas carriers. However, it is inevitable that the IAS arrangement in the lead vessel will be tweaked as the ship is commissioned and after feedback from early cargo-handling duties. There is no formal route to feed the experience of the lead ship back into the IAS setups of later ships during their fitting-out phases at the yard. IAS suppliers also need to accommodate into their systems the software of manufacturers of critical LNGC components such as cargo pumps, compressors, reliquefaction plants, gascombustion units and fuel-gas supply systems. Bearing in mind the range of equipment available to the market, this requirement adds to the challenge of providing the shipowner with a userfriendly, integrated monitoring and control system. Although it is impossible to eradicate human error from IAS packages, the gas-shipping industry acknowledges that there is still room for improvement. Artificial intelligence has a role to play in the drive for more consistency in the CCR and still greater levels of ship safety. The gathering, transmission and storage of real-time ship operational data will no doubt facilitate machine learning in future. LNG

Artificial intelligence has a role to play in the drive for more consistency in the CCR and still greater levels of ship safety

LNG World Shipping | January/February 2018


Transferring know-how for smarter LNG

In the LNG arena, diversity is the norm. From traditional terminals to bunker barges and everything in between, interfaces can vary substantially.

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Find fast ROI and meet demanding safety standards. Trelleborg has unique oversight of the entire LNG supply chain, and interfaces throughout, with the most integrated and configurable solutions. Take the Smarter Approach. Optimize the business model of your transfer operation with Trelleborg. T REL L EB O R G M A RINE SYS T EMS

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LNGC FLEET DEVELOPMENTS | 33

Floaters took centre stage in 2017 LNGC deliveries and orders

T

he portfolio of LNG carriers delivered in 2017 consists of an unprecedented mix of vessel types. The 37 vessels handed over to their owners during the year comprise four LNG/ ethane carriers, three bunker tankers, two floating production (FLNG) vessels (floaters), three icebreaking LNGCs, four floating storage and regasification units (FSRUs) and 21 conventional LNGCs. The delivery total is less than originally envisaged. A look at the LNGC orderbook 12 months ago showed that 57 vessels were due to be completed during 2017. However, the fleet was oversupplied during the first quarter of the year, as reflected in the number of idle ships and the desultory freight returns then prevalent in the spot market. The situation prompted some hasty negotiations between shipowners and yards, and delayed commissioning dates for a number of ships were agreed. The postponements also helped the shipbuilders, not least by extending yard workloads beyond the original schedules at a time when very few newbuilding contracts were being signed and future prospects for highly geared production lines looked bleak.

Offshore building blocks in service

The two FLNG vessels delivered in 2017 – Exmar’s 16,100 m³ Caribbean FLNG and Shell’s 220,000 m³ Prelude – as well as one of the four FSRUs are

www.lngworldshipping.com

DELIVERIES 2017 LNG/ethane carriers

4 Bunker tankers

3 FLNG vessels

2 Icebreaking LNGCs

3 FSRUs

4 Conventional LNGCs

21

non-propelled units. FLNG vessels are built to remain on station, permanently, until the exploitation of the gas in the field being served is complete. Thereafter, they are towed to new fields and new employment. Caribbean FLNG and Prelude are only the industry’s second and third FLNG vessels. The first, the 180,000 m³ Petronas unit PSLNG Satu, is on site off Bintulu in Malaysia working the Kanowit field, having loaded the world’s first FLNG-produced cargo in March 2017. Caribbean FLNG, which was completed by the Wison yard in China in July and has the capacity to produce 0.5 mta of LNG, was originally built for a location off Colombia’s Caribbean coast but that project fell through. Exmar is still negotiating employment opportunities for the vessel, including possible deployment on Iran’s Pars field. Prelude was handed over by Samsung Heavy Industries (SHI) to Shell in June and the unit is now positioned on the Prelude gas field, 475 km northwest of Broome in Australia, undergoing an elaborate set of commissioning procedures. Able to produce 3.6 mta of LNG, 0.4 mta of LPG and 1.3 mta of condensate from the field’s natural gas, the vessel displaces 600,000 tonnes and is the world’s largest floating structure. Operations will start later this year. The non-propelled FSRU completed in 2017 is also a Wison-built vessel for Exmar. The 26,000 m³ unit is able to regasify up to 4.5 mta of LNG

and is the first barge-based FSRU. It is also the first regas vessel to boast tanks built to IHI’s self-supporting, prismatic-shape, IMO Type B (SPB) design. Although Wison delivered the unit in December, at the time of writing in early January, it still does not have a name. Exmar states that long-term employment for the FSRU has been secured with an established third party and hire will start from mid-2018 onwards. The vessel’s name will emerge shortly, along with details of the employment contract. By shipbuilding country, South Korea constructed 25 of the 37 LNG vessels that joined the fleet in 2017, China 10 and Japan and the Netherlands one each. Daewoo Shipbuilding & Marine Engineering (DSME) was the leading yard in terms of ship completions, with 13 vessels. Amongst DSME’s output were the three icebreaking LNG carriers and the biggest of the four FSRUs. At 263,000 m³, the latter vessel, MOL FSRU Challenger, is the largest FSRU ever built. Originally earmarked for Uruguay, the FSRU has been taken on charter by Botas of Turkey while the outstanding sticking points in the initial contract are resolved.

New orders in 2017

A total of 23 LNG vessels were ordered in 2017, comprising four coastal distribution/bunker tankers, five FSRUs, one FLNG vessel and 13 conventional LNGCs. By shipbuilder, Korea will construct 17 of the vessels

LNG World Shipping | January/February 2018


34 | LNGC FLEET DEVELOPMENTS

contracted last year and China six. The Korean contingent will be split between Hyundai Heavy industries (HHI), with eight vessels, SHI five and DSME four. DSME’s status as the leading yard in terms of ship completions in 2017 is a reflection of its success three years ago in securing new contracts. At the time DSME’s package of two-stroke, highpressure, gas-injection engines in tandem with in-house designs for a partial reliquefaction plant and fuel gas supply system helped it win the bulk of new LNGC orders. HHI and SHI immediately contested the uniqueness of the reliquefaction technology promoted by their rival yard and took the issue to court. A judicial ruling in January 2017 found in favour of the pair’s claim and nullified DSME’s patent. Over the past year HHI and SHI have won a greater share of new LNG ship orders. Two ships whose contracts were recently confirmed do not appear in the list of 23 LNG vessels ordered in 2017, as the original deal was struck in April 2016 under some secrecy. The ships in question are a pair of 174,000 m³ FSRUs that Hudong-Zhonghua in China will build for Dynagas. The contract marks the Greek LNGC owner’s first foray into the FSRU sector. The first FSRU for another Greek LNGC owner – Maran Gas – is shown in the 2017 list of new orders. Maran Gas originally

contracted a 173,400 m³ FSRU at DSME in December 2016 (Hull No 2468) but that vessel has now been cancelled and replaced by an order for a similar ship (Hull No 2477). Dynagas and Maran Gas will join Höegh LNG, Golar LNG, BW LNG, Excelerate Energy and Exmar as FSRU operators. Other LNGC owners and gas buyers are eyeing up participation in the growing floating regasification sector, and account for some of the 2017 FSRU orders. In response to the increasing competitiveness of the standalone FSRU market, some operators have begun to develop a presence in integrated gas-to-power projects where both barriers to entry and potential profits are higher. For example, Golar, through its Golar Power affiliate, is involved in the FSRU-based joint venture that is developing the Sergipe power project in Brazil. SHI is due to deliver the 170,000 m³ FSRU Golar Nanook to Golar in September 2018. Thereafter, the vessel will commence a 25-year time charter with commissioning activities offshore Sergipe in the first half of 2019.

for the US$4.7Bn project has now been finalised and the FLNG vessel, which will be able to liquefy 3.4 mta of LNG, is due for completion in 2021. The Eni order marks a restoration of faith in the FLNG concept. Earlier in the decade floating production offered an expedient route to realising the value of remote offshore gas fields and prompted Shell, Petronas and Exmar to place FLNG newbuilding orders and Golar to convert one of its older LNGCs for a floating production role in Cameroon, due to start this year. Unfortunately, the price of hydrocarbons declined dramatically midway through the decade and a number of additional planned FLNG projects were stillborn. It has been difficult to reach final investment decisions (FIDs) on further FLNG projects in recent years but the Eni contract could signal a turnaround. A number of proposed FLNG projects remain on the table and the currently strengthening LNG prices could spur FIDs on further floating production vessels. Golar’s additional LNGC conversion proposals appear the most likely to proceed in the first instance but other schemes based on FLNG newbuildings are planned. The 2017 cavalcade of newbuilding deliveries and new ship contracts has built the in-service fleet to 515 LNG vessels and the orderbook to 124 units. LNG

FLNG rebound

The most remarkable LNG order of 2017 was that placed by Eni at SHI for the FLNG vessel required to develop the offshore Coral South gas reservoir, Mozambique’s first LNG export project. Financing

“A number of proposed FLNG projects remain on the table and the currently strengthening LNG prices could spur FIDs on further floating production vessels”

LNG CARRIER ORDERBOOK DELIVERY SCHEDULE, BY YEAR AND VESSSEL TYPE Vessel type

2018

2019

2020

2021

2022

57

37

10

1

3

FSU/FSRU

3

4

2

1

0

LNG FPSO

0

0

1

Small-scale LNG carriers

2

2

0

62

43

13

Conventional LNG carrier

Total, by year

1 2

4

LNG World Shipping, all deliveries from 31 December 2017

LNG World Shipping | January/February 2018

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36 | STATISTICS

LNG CARRIERS ON ORDER LNGC ORDERBOOK AS OF 31 DECEMBER 2017 SOUTH KOREA Hull no

Shipowner

Capacity, m3

Delivery

Charterer

Containment

Class

Propulsion

Details

Shell business

Daewoo Shipbuilding & Marine Engineering (DSME), Okpo 2456

Maran Gas

173,400

2019

Shell

GTT No96

DNV GL

LSDF (HP)

2457

Maran Gas

173,400

2019

GTT No96

LR

LSDF (HP)

open

2458

Maran Gas

173,400

2018

Shell

GTT No96

ABS/CCS

LSDF (HP)

Shell business

2459

Maran Gas

173,400

2019

Shell

GTT No96

LR/CCS

LSDF (HP)

Shell business

2466

Maran Gas

174,000

2019

GTT No96

ABS

LSDF (HP)

open

2467

Maran Gas

174,000

2019

GTT No96

LR

LSDF(HP)

open

2477

Maran Gas

173,400

2020

GTT No96

DNV GL

DFDE

FSRU; open

2478

Maran Gas

174,000

2020

GTTNo96

LSDF(HP)

open

2453

Teekay

173,400

2018

Shell

GTT No96

DNV GL

LSDF (HP)

Shell business

2454

Teekay

173,400

2018

Shell

GTT No96

DNV GL

LSDF (HP)

Shell business

2455

Teekay

173,400

2019

Yamal LNG

GTT No96

DNV GL

LSDF (HP)

Yamal cargoes

2461

Teekay

173,400

2018

Bahrain LNG

GTT No96

DNV GL

LSDF (HP)

Bahrain FSU

2427

Dynagas

172,000

2019

Yamal LNG

GTT No96

BV/RS

DFDE

icebreaking LNGC

2428

Dynagas

172,000

2019

Yamal LNG

GTT No96

BV/RS

DFDE

icebreaking LNGC

2429

Dynagas

172,000

2019

Yamal LNG

GTT No96

BV/RS

DFDE

icebreaking LNGC

2426

CSDC/MOL

172,000

2019

Yamal LNG

GTT No96

BV/RS

DFDE

icebreaking LNGC

2432

CSDC/MOL

172,000

2020

Yamal LNG

GTT No96

BV/RS

DFDE

icebreaking LNGC

2424

CSDC/MOL

172,000

2019

Yamal LNG

GTT No96

BV/RS

DFDE

icebreaking LNGC

2425

Teekay/CLNG

172,000

2018

Yamal LNG

GTT No96

BV/RS

DFDE

icebreaking LNGC

2430

Teekay/CLNG

172,000

2019

Yamal LNG

GTT No96

BV/RS

DFDE

icebreaking LNGC

2431

Teekay/CLNG

172,000

2020

Yamal LNG

GTT No96

BV/RS

DFDE

icebreaking LNGC

2433

Teekay/CLNG

172,000

2020

Yamal LNG

GTT No96

BV/RS

DFDE

icebreaking LNGC

2434

Teekay/CLNG

172,000

2020

Yamal LNG

GTT No96

BV/RS

DFDE

icebreaking LNGC

2447

Flex LNG

174,000

2018

Uniper

GTT No96

ABS

LSDF (HP)

Uniper business

2448

Flex LNG

174,000

2018

GTT No96

ABS

LSDF (HP)

open

2435

BW Group

173,400

2018

GTT No96

DNV GL

LSDF (HP)

open

2436

BW Group

173,400

2018

GTT No96

DNV GL

LSDF (HP)

open

2488

BW Group

174,000

2019

GTT No96

DNV GL

DFDE

FSRU; open

2489

BW Group

174,000

2019

GTT No96

DNV GL

LSDF (HP)

open

2460

Chandris/K Line

173,400

2018

BP

GTT No96

LR

LSDF (HP)

BP business

2464

Chandris/K Line

173,400

2018

BP

GTT No96

LR

LSDF (HP)

BP business

2441

BP Shipping

173,400

2018

BP

GTT No96

LR

LSDF (HP)

BP business

2442

BP Shipping

173,400

2018

BP

GTT No96

LR

LSDF (HP)

BP business

2443

BP Shipping

173,400

2018

BP

GTT No96

LR

LSDF (HP)

BP business

2444

BP Shipping

173,400

2019

BP

GTT No96

LR

LSDF (HP)

BP business

2445

BP Shipping

173,400

2019

BP

GTT No96

LR

LSDF (HP)

BP business

2446

BP Shipping

173,400

2019

BP

GTT No96

LR

LSDF (HP)

BP business

2462

MOL/Itochu

180,000

2018

Uniper

GTT No96

LSDF (LP)

Uniper business

2470

Flex LNG

173,400

2019

GTT No96

ABS

LSDF(HP)

open

2471

Flex LNG

173,400

2019

GTT No96

ABS

LSDF(HP)

open

Samsung Heavy Industries (SHI), Geoje 2189

Golar Power

170,000

2018

Golar Power

GTT MkIII

DNV GL

DFDE

Sergipe FSRU

2130

GasLog

174,000

2018

Shell

GTT MkIII

ABS

LSDF (LP)

Shell business

2131

GasLog

174,000

2019

Shell

GTT MkIII

ABS

LSDF (LP)

Shell business

2212

GasLog

180,000

2019

Centrica

GTT MkV

LSDF (LP)

Sabine Pass exports

2213

GasLog

180,000

2019

GTT MkV

LSDF (LP)

open

LNG World Shipping | January/February 2018

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STATISTICS | 37

2081

SK Shipping/Marubeni

180,000

2018

Total

GTT MkIII

BV

LSDF (LP)

Sabine Pass exports

2107

Flex LNG

174,000

2018

GTT MkIII

ABS

LSDF (HP)

open

2108

Flex LNG

174,000

2018

GTT MkIII

ABS

LSDF (HP)

open

Petronas

180,000

2020

Petronas

GTT MkIII

N/A

LNG FPSO

2148

MOL/NYK Line

174,000

2018

Mitsui & Co

GTT MkIII

LSDF (LP)

Cameron exports

2149

MOL/Mitsui & Co

174,000

2018

Mitsui & Co

GTT MkIII

LSDF (LP)

Cameron exports

2150

MOL/Mitsui & Co

174,000

2018

Mitsui & Co

GTT MkIII

LSDF (LP)

Cameron exports

2153

SK Shipping

174,000

2018

Kogas

KC-1

DFDE

Sabine Pass exports

2154

SK Shipping

174,000

2018

Kogas

KC-1

DFDE

Sabine Pass exports

2220

Höegh LNG

170,000

2019

GTT MkIII

DFDE

FSRU; open

2233

Korea Line

7,500

2019

Kogas

KC-1

KRS

DFDE

South Korea coast

2234

Korea Line

7,500

2019

Kogas

KC-1

KRS

DFDE

South Korea coast/

Pertamina consortium

170,000

2019

Pertamina

GTT MkIII

DFDE

Indonesia FSRU

Eni

TBC

2021

Eni

GTT MkIII

N/A

Coral South FLNG

GasLog

180,000

2019

TBC

GTT MkIII

LSDF (LP)

open

bunkering – 2235 –

Hyundai Heavy Industries (HHI), Ulsan 2865

Höegh LNG

170,000

2018

Penco LNG

GTT MkIII

DNV GL

DFDE

Chile FSRU

2909

Höegh LNG

170,000

2018

Global Energy

GTT MkIII

DNV GL

DFDE

Pakistan FSRU

2732

MISC

150,000

2018

Petronas

Moss

LR

UST

Petronas projects

2735

MISC

150,000

2018

Petronas

Moss

LR

UST

Petronas projects

2800

GasLog

174,000

2018

Shell

GTT MkIII

DNV GL

LSDF (LP)

Shell business

2801

GasLog

174,000

2018

Total

GTT MkIII

DNV GL

LSDF (LP)

Total business

2854

Gazprom

174,000

2017

Gazprom

GTT MkIII

RS

DFDE

Kaliningrad FSRU

2937

SK Shipping

180,000

2019

SK E&S

GTT MkIII

LSDF (LP)

Freeport exports

2938

SK Shipping

180,000

2019

SK E&S

GTT MkIII

LSDF (LP)

Freeport exports

2945

Kolin/Kalyon

170,000

2019

Kolin/Kalyon

GTT MkIII

DFDE

Turkey FSRU

2963

Knutsen OAS

180,000

2020

Iberdrola

GTT MkIII

LSDF (HP)

Corpus Christi exports

2964

Knutsen OAS

180,000

2020

Endesa

GTT MkIII

LSDF (HP)

Corpus Christi exports

2993

Triumph Offshore

180,000

2019

Swan Energy

GTT MkIII

DFDE

Jafrabad FSRU

3020

TMS Cardiff Gas

174,000

2020

Total

GTT MkIII

LSDF (LP)

Total business

3021

TMS Cardiff Gas

174,000

2020

Cheniere

GTT MkIII

LSDF (LP)

Cheniere business

3022

TMS Cardiff Gas

174,000

2020

GTT MkIII

LSDF (LP)

open

Hyundai Samho Heavy Industries (HSHI), Samho-Myun S856

Teekay

164,000

2019

BP

GTT MkIII

DFDE

BP business

S857

Teekay

164,000

2019

BP

GTT MkIII

DFDE

BP business

7,500

2018

Nauticor/SGD

Type C

LR

DFDE

Baltic bunker vessel

Hyundai Mipo Dockyard, Ulsan 8250

Bernhard Schulte

JAPAN Mitsubishi Heavy Industries (MHI), Nagasaki 2310

K Line

155,000

2018

Inpex Corp

Moss

ClassNK

UST

Ichthys exports

2316

NYK

155,000

2018

Tokyo Electric

Moss

ClassNK

UST

Wheatstone exports

2321

MOL

177,000

2018

Mitsui & Co

Moss

ClassNK

StaGE

Cameron exports

2323

MOL

177,000

2018

Mitsui & Co

Moss

ClassNK

StaGE

Cameron exports

2322

NYK

177,000

2019

Mitsui & Co

Moss

ClassNK

StaGE

Cameron exports

2324

NYK

165,000

2018

Mitsui & Co

Moss

ClassNK

StaGE

Cameron exports

2325

NYK

165,000

2018

Mitsui & Co

Moss

ClassNK

StaGE

Cameron exports

2326

MOL/Chubu Electric

180,000

2018

Chubu Electric

Moss

ClassNK

StaGE

Freeport exports

2327

NYK/Chubu Electric

180,000

2018

Chubu Electric

Moss

ClassNK

StaGE

Freeport exports

2332

Mitsubishi Corp

165,000

2019

Mitsubishi

Moss

ClassNK

StaGE

Mitsubishi business

Chubu Electric use

Kawasaki Heavy Industries (KHI), Sakaide 1720

MOL

164,700

2018

Chubu Electric

Moss

ClassNK

UST

1718

K Line

182,000

2018

Inpex Corp

Moss

BV

DFDE

Ichthys-Taiwan

1731

NYK/Kepco

177,000

2018

Kansai Electric

Moss

ClassNK

DFDE

Cove Point exports

1728

MOL

155,000

2018

Mitsui & Co

Moss

ClassNK

DFDE

Cameron exports

www.lngworldshipping.com

LNG World Shipping | January/February 2018


YOUR PARTNER IN SHIP PERFORMANCE MONITORING www.kyma.no

38 | STATISTICS

1729

MOL

155,000

2019

Mitsui & Co

Moss

ClassNK

DFDE

Cameron exports

1734

MOL/Chubu Electric

177,000

2018

Chubu Electric

Moss

ClassNK

DFDE

Freeport exports

1735

NYK/Chubu Electric

177,000

2018

Chubu Electric

Moss

ClassNK

DFDE

Freeport exports

GNF business

Imabari Shipbuilding, Imabari 8177

Elcano

174,000

2018

GNF

GTT MkIII

LR

LSDF (HP)

8188

Elcano

174,000

2018

GNF

GTT MkIII

LR

LSDF (HP)

GNF business

8200

K Line

178,000

2021

Mitsui & Co

GTT MkIII

ClassNK

LSDF (HP)

Cameron exports

8215

Unknown

178,000

2022

GTT MkIII

LSDF (HP)

open

8216

Unknown

178,000

2022

GTT MkIII

LSDF (HP)

open

8217

Unknown

178,000

2022

GTT MkIII

LSDF (HP)

open

165,000

2018

Tokyo Gas

SPB

ClassNK

DFDE

Cove Point exports

Japan Marine United, Kumamoto 5070

MOL/Tokyo LNG Tanker

5071

NYK/Tokyo LNG Tanker

165,000

2018

Tokyo Gas

SPB

ClassNK

DFDE

Cove Point exports

5072

MOL/Tokyo LNG

165,000

2019

Tokyo Gas

SPB

ClassNK

DFDE

Cove Point exports

165,000

2019

Tokyo Gas

SPB

ClassNK

DFDE

Cove Point exports

APLNG exports

Tanker 5073

MOL/Tokyo LNG Tanker

CHINA Hudong-Zhonghua Shipbuilding, Shanghai 1719A

CESI/MOL

174,000

2018

Sinopec

GTT No96

LR/CCS

DFDE

1720A

CESI/MOL

174,000

2018

Sinopec

GTT No96

LR/CCS

DFDE

APLNG exports

1664A

CNOOC/CLNG/TK

174,000

2018

Shell

GTT No96

ABS/CCS

DFDE

QCLNG exports

1665A

CNOOC/CLNG/TK/BW

174,000

2018

Shell

GTT No96

ABS/CCS

DFDE

QCLNG exports

1666A

CNOOC/CLNG/TK/BW

174,000

2019

Shell

GTT No96

ABS/CCS

DFDE

QCLNG exports

1810A

MOL

174,000

2019

Yamal LNG

GTT No96

DFDE

Yamal cargoes

1811A

MOL

174,000

2020

Yamal LNG

GTT No96

DFDE

Yamal cargoes

1812A

MOL

174,000

2020

Yamal LNG

GTT No96

DFDE

Yamal cargoes

1813A

MOL

174,000

2020

Yamal LNG

GTT No96

DFDE

Yamal cargoes

Dynagas

174,000

2020

GTT No96

DFDE

FSRU; open

Dynagas

174,000

2021

GTT No96

DFDE

FSRU; open

30,000

2018

CNPC Kunlun

Type C

CCS

DFDE

China coast

28,000

2018

CNPC Kunlun

Type C

CCS

DFDE

China coast

N/A

2018

VGS

TBC

N/A

LNG FRU

45,000

2018

Saga LNG

LNT A-Box

ABS

DFDE

China coast

Ningbo Xinle Shipbuilding, Ningbo XL-157

PetroChina

Cosco Dalian Shipyard, Dalian N588

Dalian Inteh

Wison Offshore & Marine, Nantong –

VGS

China Merchant Heavy Industry, Nantong 188

Landmark Capital

Shipping Keppel Singmarine, Nantong H055

Stolt-Nielsen

7,500

2018

TBC

Type C

DFDE

Coastal Europe

H056

Stolt-Nielsen

7,500

2018

TBC

Type C

DFDE

Coastal Europe

18,000

2017

Skangas

Type C

BV

DFDE

Baltic trading

GERMANY Neptun Werft, Rostock S.575

Anthony Veder

Table includes newbuilding FSRUs, LNG FPSOs and LNG bunker vessels. Propulsion key: DFDE = dual-fuel diesel-electric; ST = steam turbine; UST = ultra steam turbine; StaGE = steam turbine and gas engine; LSDF (HP) = low-speed dual-fuel (high-pressure); LSDF (LP) = low-speed dual-fuel (low-pressure) LNG World Shipping, data as of 31 December 2017

LNG World Shipping | January/February 2018

www.lngworldshipping.com


YOUR PARTNER IN SHIP PERFORMANCE MONITORING www.kyma.no

STATISTICS | 39

LNG CARRIER NEWBUILDINGS DELIVERED 1 JANUARY – 31 DECEMBER 2017 Vessel name

Delivery

Capacity, m3

Owner

Builder

Charterer

Containment

Details

Cesi Qingdao

1.2017

174,000

CESI/MOL

Hudong

Sinopec

GTTNo96

APLNG exports

Maran Gas Roxana

1.2017

173,400

Maran Gas

Daewoo

Shell

GTTNo96

Shell business

Maran Gas Ulysses

1.2017

174,000

Maran Gas

Hyundai Samho

Shell

GTTMkIII

Shell business

Seri Cenderawasih

1.2017

150,000

MISC

Hyundai

Petronas

Moss

Petronas projects

JS Ineos Innovation

1.2017

27,500

Evergas

Sinopacific

Ineos

Type C

Ethane service

Torben Spirit

2.2017

173,400

Teekay

Daewoo

Shell

GTTNo96

Shell business

Maran Gas Olympias

2.2017

173,400

Maran Gas

Daewoo

Shell

GTTNo96

Shell business

Asia Integrity

2.2017

160,000

Chevron

Samsung

Chevron

GTTMkIII

Gorgon exports

Ougarta

3.2017

170,000

Hyproc Shipping

Hyundai

Sonatrach

GTTMkIII

Algerian exports

BW Integrity

3.2017

170,000

BW Group

Samsung

Pakistan GasPort

GTTMkIII

Port Qasim FSRU

JS Ineos Intuition

3.2017

27,500

Evergas

Yangzijiang

Ineos

Type C

Ethane service

SM Eagle

4.2017

174,000

Korea Line

Daewoo

Kogas

GTTNo96

Sabine Pass exports

Hoegh Giant

4.2017

170,000

Höegh LNG

Hyundai

Quantum Power

GTTMkIII

Tema FSRU

JS Ineos Independence

4.2017

27,500

Evergas

Sinopacific

Ineos

Type C

Ethane service

Engie Zeebrugge

4.2017

5,100

Fluxys/Gas4Sea

Hanjin

Engie

Type C

Zeebrugge bunkering

Hyundai Princepia

5.2017

174,000

Hyundai LNG

Daewoo

Kogas

GTTNo96

Sabine Pass exports

SM Seahawk

5.2017

174,000

Korea Line

Daewoo

Kogas

GTTNo96

Sabine Pass exports

JS Ineos Invention

5.2017

27,500

Evergas

Yangzijiang

Ineos

Type C

Ethane service

Cesi Beihai

6.2017

174,000

CESI/MOL

Hudong

Sinopec

GTTNo96

APLNG exports

Cardissa

6.2017

6,500

Shell

STX

Shell

Type C

Rotterdam bunkering

Hyundai Peacepia

6.2017

174,000

Hyundai LNG

Daewoo

Kogas

GTTNo96

Sabine Pass exports

Prelude

6.2017

220,000

Shell

Samsung

Shell

GTTMkIII

Prelude FPSO

Seri Cempaka

7.2017

150,000

MISC

Huyundai

Petronas

Moss

Petronas projects

SK Audace

7.2017

180,000

SK Shipping/ Marubeni

Samsung

Total

GTTMkIII

Ichthys exports

Asia Venture

7.2017

160,000

Chevron

Samsung

Chevron

GTTMkIII

Gorgon exports

Caribbean FLNG

7.2017

16,100

Exmar

Wison

TBC

Type C

FLRSU; open

Coralius

7.2017

5,800

Sirius/Veder

Royal Bodewes

Skangas

Type C

N Europe bunkering

Cesi Tianjin

9.2017

174,000

CESI/MOL

Hudong

Sinopec

GTTNo96

APLNG exports

Pan Asia

10.2017

174,000

CNOOC/CLNG/TK

Hudong

Shell

GTTNo96

QCLNG exports

MOL FSRU Challenger

10.2017

263,000

MOL

Daewoo

Botas

GTTNo96

Turkey FSRU

Boris Vilkitsky

10.2017

172,000

Dynagas

Daewoo

Yamal LNG

GTTNo96

Yamal exports

Macoma

10.2017

173,400

Teekay

Daewoo

Shell

GTTNo96

Shell business

Fedor Litke

11.2017

172,000

Dynagas

Daewoo

Yamal LNG

GTTNo96

Yamal exports

Murex

11.2017

173,400

Teekay

Daewoo

Shell

GTTNo96

Shell business

Eduard Toll

12.2017

172,000

Teekay

Daewoo

Yamal LNG

GTTNo96

Yamal exports

Bishu Maru

12.2017

164,700

K Line

Kawasaki

Jera

Moss

Jera business

TBC

12.2017

25,000

Exmar

Wison

TBC

IHI SPB

FSRU; TBC

LNG World Shipping, data as of 31 December 2017

www.lngworldshipping.com

LNG World Shipping | January/February 2018


40 | VIEWPOINT

THE GOLDEN AGE OF GAS? WE’RE GETTING THERE

T Debbie Turner is director of SSY Gas. She was speaking at the LNG World Shipping ship-shore interface conference

The LNG fleet at year-end 2017 Ship type

existing

on order

total

LNG carrier

445

102

547

FSRU/FSU

32

14

46

Small/ multipurpose

28

8**

36

FLNG

6*

2

8

Total

511

126

637

Source: SSY Gas, November 2017 *includes vessels being converted ** includes LNG bunker-supply ships

LNG World Shipping | January/February 2018

aking a commercial view of LNG prospects, we’ve heard a lot of talk about a golden age of gas – and in SSY Gas’ opinion, we are getting there. By the end of 2020, we expect the volume of traded LNG to top 400 mta – based on production, not capacity – up from just over 250 mta in 2016. This points to huge growth between 20152020, led by new projects concentrated in the US and Australia. In 2017-2020, we expect new US projects to drive growth. To match that surge in production requires import markets, and import demand is also rising. There is a popular view that Europe is an empty bucket for LNG. In fact, we are not yet seeing that. Demand growth is still concentrated in the Far East. China has achieved a 59% increase in LNG imports year-on-year, and this has had a huge impact on the market. Even Japan is holding its own, despite fluctuating volumes month by month. And South Korea, too, is using LNG to replace coal and nuclear power production. When it comes to India, we have a question mark, however. And the unknown here comes down to import infrastructure – a key element in all new LNG markets. When it comes to emerging-market demand for floating storage and regasification units (FSRUs) and floating storage units (FSUs), the only thing that matters is infrastructure, infrastructure, infrastructure. Vessels command very different rates depending on whether they are FSRUs or LNG carriers – it’s very costly for a shipowner to have an FSRU waiting around. Any new import project must be able to discharge gas into a domestic system. Pakistan, Bangladesh and Myanmar all want to charter FSRUs and all are facing challenges. However, Egypt is moving in the opposite direction, on course to

become a major exporter again, as early as 2019-2020. As for LNG shipping, we will see orders peak in 2018. From 2020 the orderbook is low, reflecting a prolonged downturn in new orders. At around US$183M a go, LNG ships are the most expensive tonnage in the world – and among the smartest, most economical ships to run. Shipowners are still reticent about ordering new tonnage, not least because the future of Japan’s offtake agreements is so uncertain. It is unclear whether additional US volumes will remain in the Atlantic Basin or ship long-distance to the Far East, which would boost tonne-mile demand. That dearth of orders means a supply crunch is coming. The shipyards in Japan and South Korea are offering additional storage to hold vessels booked against projects that are delayed. In November, some 25 ships were still in the yards. That decision to let them remain there is helping to keep shipping tight. The dynamics have changed in propulsion technology. LNG shipping has moved from steam to tri-fuel, which includes the use of gas injection systems. After 30 years of using high-pressure water vapour to cause propellers to turn came large, often speculative orders for LNG carriers with dual and tri-fuel dieselelectric engines. The dual and tri-fuel vessels are quickly being replaced by orders for ships with ME-GI/XDF slow-speed diesel engines. All engine types have advantages and disadvantages, but changes in ordering reflect a constant need to improve efficiency and reduce performance costs. By the end of September, LNG carriers had made 159 transits through the Panama Canal. The waterway was not designed for LNG carriers, yet all the slots available in 2018 to LNG carriers are fully booked; unused slots revert to other tonnage. LNG

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LNG World Shipping’s coverage of the global LNG shipping industry is the best there is. The journal covers the full length of the LNG mariti...

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LNG World Shipping’s coverage of the global LNG shipping industry is the best there is. The journal covers the full length of the LNG mariti...