Page 1

September/October 2018 www.lngworldshipping.com

US Gulf: The new LNG loading zone

Streamlining Arctic LNG logistics

LNG bunker fleet gains momentum

“The earliest a newbuilding can now be delivered is 2021, which points towards a tighter market in 2019 and 2020 and underpins the outlook for shipping rates� Paul Wogan, chief executive officer, GasLog, see page 68


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Contents September/October 2018 volume 40 issue 4

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21

Comment

5 As the industry prepares for Gastech 2018 in Barcelona, Mike Corkhill reflects on what has been, so far, a truly remarkable year for LNG shipping

Gastech 2018 preview

6 The six member companies of the Spanish Gastech Consortium hosting Gastech 2018 in Barcelona have all had busy years in the LNG sector

Area Report – US Gulf/Caribbean

9 LNGC traffic throughout the Caribbean is on a steep growth curve, as US Gulf exports climb and regional import projects come onstream

Industry leaders

25

13 Major LNG carrier owners met at the Capital Link event during Posidonia 2018 to discuss the key issues facing LNG shipping

LNG bunker vessel fleet

17 Our survey shows six LNG bunker vessels, including barges, in service and a further 12 on order, as of 1 August 2018

Ship profile – Kairos LNG bunker vessel

21 Angus Campbell of Bernhard Schulte and Andrew Scott of Babcock describe their new joint venture LNG bunker vessel Kairos

Arctic LNG logistics

25 In the drive to reduce costs Novatek is planning strategic transshipment hubs and having its Arc7 LNGCs spend more time in the ice

29

FSRU update

29 While some floating storage and regasification unit projects are coming full circle and closing down, new schemes far outweigh the closures

Nakilat/N-KOM report

35 Ras Laffan is home base for the complementary forces that are the world’s largest LNGC fleet and the world’s newest LNGC repair yard

LNG carrier fleet analysis

39 New statistics from VesselsValue and Clarksons Research convey the underlying strengths of an undeniably buoyant shipping market sector

LNG carrier fleet infographic

52

40 VesselsValue statistics encapsulating the in-service and on-order LNG carrier fleets by size, value, age, type and ownership

Shipowner profile

42 Dynagas is playing a key role in providing ice-class LNG carriers that are helping smooth the flow of Yamal export cargoes

LNG as marine fuel

45 LNG’s credentials as a transitional marine fuel have been called into question as we head for a zero emissions future. What’s the story?

LNG in China

49 LNG import terminal operators in China are working to provide the infrastructure needed for the country’s burgeoning gas purchases

www.lngworldshipping.com

LNG World Shipping | September/October 2018


Contents September/October 2018 volume 40 issue 4

LPG and Chemical Gas Carriers - Special Report Very large gas carrier (VLGC) fleet

www.lngworldshipping.com Editor: Mike Corkhill t: +44 1825 764 817 e: mike.corkhill@rivieramm.com

52 The VLGC market is bouncing back as US LPG exports and Chinese imports are growing once again

Production Editor: Kevin Turner t: +44 20 8370 1737 e: kevin.turner@rivieramm.com

LPG and chemical gas carriers - infographic

Brand Manager: Ian Pow t: +44 20 8370 7011 e: ian.pow@rivieramm.com

54 VesselsValue statistics encapsulating the in-service and on-order LPG carrier fleets by size, value, age, type and ownership

Shipowner profile and ethane transport

57 Navigator Gas is pushing ahead with projects to enhance the environmental performance of its large ethylene and ethane carriers

Statistics – fleet developments

Sales: Kaara Barbour Southeast Asia & Australasia Representative t: +61 414 436 808 e: kaara.barbour@rivieramm.com Head of Sales - Asia: Kym Tan t: +65 6809 1278 e: kym.tan@rivieramm.com

60 A recent seven-week burst of unprecedented activity will ensure stand-out LNG carrier order and newbuilding delivery levels in 2018

Production Manager: James Millership t: +44 20 8370 1718 e: james.millership@rivieramm.com

Statistics – LNGCs on order and delivered

Chairman: John Labdon Managing Director: Steve Labdon Finance Director: Cathy Labdon Operations Director: Graham Harman Head of Content: Edwin Lampert Head of Production: Hamish Dickie

63 Bimonthly update of the LNG carrier orderbook and ships delivered over the past 18 months

Viewpoint

68 GasLog’s Paul Wogan explains why robust LNG supply and demand fundamentals are setting the scene for a tighter shipping market

Next Issue:

The November/December 2018 issue of LNG World Shipping will cover: • Indian subcontinent – terminals and projects • Shipmanagement • Crew training; simulators • Ship/shore interface: cargo transfer and mooring equipment •Ship repair and lifecycle maintenance • Shipowner profile Front cover image: GasLog Houston and GasLog Geneva loading at Sabine Pass in March 2018 (Courtesy of GasLog)

Published by: Riviera Maritime Media Ltd Mitre House 66 Abbey Road Enfield EN1 2QN UK

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LNG World Shipping | September/October 2018

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COMMENT | 5

Much to celebrate as the LNG industry congregates

T Mike Corkhill, Editor

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he organisers of Gastech 2018, to be held in Barcelona on 17-20 September, say they expect upwards of 30,000 visitors to the event’s conference sessions and exhibition halls. Such a turnout is the same as the population of my home town and must represent a significant chunk of the global LNG industry. It would certainly make this year’s gathering the largest in Gastech’s 45-year and 30-conference history. The participants in Barcelona will have much to consider. As the contents of this issue of LNG World Shipping make clear, 2018 is set to go down in the LNG history books as both a recordbreaker and a game-changer. While rising LNG exports from the US and Australia and the growing purchases of cargoes by China, Korea, India and Pakistan are driving much of the current change, this is not the whole story. The envelope of ship operations is being extended through the introduction of icebreaking LNG carriers, and floating storage and regasification units are enabling more and more nations to join the LNG club on a fast-track basis. In April 2018 the global maritime community, through IMO, agreed to introduce ambitious new restrictions on greenhouse gas (GHG) emissions by 2050. The use of LNG as marine fuel, because its combustion does give off quantities of carbon dioxide, subsequently came under attack as a useless and expensive diversion in the quest to meet the new requirements. Yet clean-burning natural gas is an ideal bridging fuel. It meets all the emissions targets that will be in place for the next 30 years and provides a ready substitute for those occasions when renewable energy sources are unavailable. And advances in LNG fuel technology are on the horizon, including greater use of bioLNG, with its zero GHG emissions rating. A key link in the required LNG bunkering

infrastructure that has been missing to date is the LNG bunker vessel (LNGBV) itself. That gap is now being filled, with a lively new round of LNGBV orders in 2018, to enable the quick and efficient fuelling of much larger LNG-powered ships than was previously possible. Brisk shipyard activity is one direct result of escalating movements of LNG, which are set to boost the global trade in the product by 11% in 2018 and maintain a healthy expansion rate over the next few years. Our LNG carrier newbuilding report shows that, with 38 vessels completed as of 20 August and another 25 scheduled for delivery before 31 December, 2018 looks set to be a record year for LNG deliveries. To everyone’s surprise, this year has been even busier in terms of new ship orders. As of 20 August 2018, a total of 43 LNG newbuilds had been contracted. It has reached a point where no ship ordered now could possibly be delivered before 2021. This level of confidence in ordering new vessels anticipates new tonnage requirements and new LNG projects, many of which are currently on the table, regarded positively and on the verge of final investment decisions. Brave shipowners are willing to take a bet on a market which is underpinned by surging optimism about the future. LPG is a sector that is no longer covered by Gastech to the extent it was in the “old days”. Our coverage of LPG and chemical gas carriers in this issue shows that it too is a vibrant gas shipping sector, with very large gas carrier movements of LPG at record and growing levels and the transport of ethane poised to emerge as the fourth largest gas carrier cargo over the next few years. In the meantime, LNG World Shipping is poised to report on a new wave of industry developments stemming from a gathering of the clans for four days in Barcelona. LNG

LNG World Shipping | September/October 2018


6 | GASTECH 2018 PREVIEW

Six Spanish LNG leaders to host Gastech 2018 Repsol, CEPSA, Reganosa, Naturgy, Técnicas Reunidas and Enagás – the six member companies of the Spanish Gastech Consortium – are hosting this year’s event in Barcelona

G

astech is returning to Spain after a 13-year absence, the 2005 event having been held in Bilbao. The venue this year is Barcelona and the 2018 gathering, on 17-20 September, promises to be the largest in Gastech’s 45year and 30-conference history. The record-breaking, multi-streamed 2018 conference agenda will feature more than 200 strategic and technical presentations and 350 speakers, while bookings by delegates attending the sessions are expected to top 3,000. The four-day timetable encompasses a plenary stage, strategic and technical conferences, a VIP global leaders’ summit and four smaller specialist programmes: the Asia LNG Market Development Forum; the LNG Trading & Procurement Forum; Diversity in Energy; and Young Gastech. Over 700 companies have booked stands in the 50,000 m2 of exhibition hall space at the Barcelona venue. The layout will include various groupings, including six new industry zones and 15 country pavilions, while around 30,000 visitors are expected to be checking out the exhibitor displays during Gastech week.

Hosts with the most

Gastech exhibitions bring together the greatest concentration of gas shipping industry equipment suppliers and service providers

LNG World Shipping | September/October 2018

Ensuring the success of an event the size of Gastech requires a considerable commitment and the six member companies of the Spanish Gastech Consortium hosting proceedings will play a key role in ensuring a meeting to remember. They are CEPSA, Enagás, Gas Natural Fenosa (Naturgy), Reganosa, Repsol and Técnicas Reunidas. Each of the consortium members has made its own distinct mark in the LNG sector. An integrated energy company based in Madrid, Repsol SA believes that the global gas industry needs to continue to push technology boundaries. It is not enough for gas to be “the least bad fossil fuel”. The gas community is already pressing ahead with initiatives aimed at reducing the environment footprint left by liquefying LNG and burning natural gas. Notable among these, points out Repsol, are efforts to reduce methane slip across the gas supply chain; convert gas to hydrogen for use in generating power and as a transport fuel; and increase biomethane production. Although a major player in the gas sector, Repsol sold most of

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GASTECH 2018 PREVIEW | 7

its LNG assets earlier in the decade to repay debts. The company has been re-engaging in the sector more recently, including through the charter of BW Lilac, the 174,000 m3 Daewoo-built LNG carrier, from BW LNG for transporting cargoes from the US to Spain, and a series of ground-breaking bunkering operations involving LNG-powered ships in Spain. In April 2018, Repsol collaborated with the Enagás-operated Cartagena LNG receiving terminal and the Cartagena Port Authority to refuel an LNG-powered ship in Spain directly across the terminal jetty using the facility’s pipework. Flexible cryogenic hoses, rather than marine loading arms, were used to accommodate the location of the LNG manifold on the vessel being bunkered. The 15,000-dwt bitumen tanker Damia Desgagnes was the ship fuelled. Cartagena provided the dual-fuel tanker with 370 m3 of LNG to enable the ship to complete its delivery voyage, from a Turkish shipyard to its home base on the St Lawrence Seaway, while running on LNG.

More LNG bunkering plays

Cepsa, the Iberian Peninsula’s leading bunker fuel supplier, is also an advocate of a growing commitment to LNG as marine fuel. Earlier this year the company famously added two 300 m3 LNG deck tanks to Oizmendi, one of its 11 oil bunker vessels, to create the Mediterranean’s first multipurpose LNG/oil fueling vessel. After delivering 90 m3 of LNG to the dual-fuel cement carrier Ireland in the port of Bilbao in February 2018, Cepsa has relocated Oizmendi to the southern Spanish port of Huelva. There, the bunker barge will be able to load LNG at the Enagás-operated Huelva receiving terminal for subsequent ship-to-ship transfers of fuel to LNG-powered vessels bunkering in the area. Cepsa is reviewing the possibility of providing LNG-capable bunker vessels in further Iberian ports. The obvious priorities are the locations already home to LNG receiving terminals. In Spain that means, in addition to Bilbao, Cartagena and Huelva, El Ferrol, Barcelona and Sagunto, while in Portugal Sines is under scrutiny. Reganosa is an energy infrastructure company which owns and manages the Mugardos LNG receiving terminal in the northwestern Spanish port of El Ferrol. The company also assists with the operation of the Delimara regasification plant in Malta. Navantia, one the world’s busiest LNG carrier repair yards, is also located in El Ferrol and in recent years Reganosa has added a gassing-up and cooldown service to its basic regasification and cargo reload package. In this way, LNG carriers that have completed their maintenance programmes at Navantia can stop at the Mugardos terminal before leaving the port to take on sufficient LNG to ensure that cargo tanks are cooled to the required level before arrival at the next loading port. Reganosa is also seeking to build on its strategic location and to develop Mugardos as both an LNG bunkering facility and a hub terminal for the Galicia region. The masterplan includes constructing a third 150,000 m3 storage tank and a second jetty to accommodate a full range of LNG carriers, from the largest down to small coastal tankers and LNG bunker vessels. Able to trace its Spanish roots back 175 years, Gas Natural Fenosa opted for a facelift in June 2018 when the company was renamed Naturgy. A leading global LNG player, with particular emphasis on the Atlantic Basin and the Mediterranean, Naturgy employs a fleet of 11 chartered LNG carriers to match its supply options with its customers’ needs. The portfolio of supply options is growing, as purchase

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contracts finalised in recent years by the company are set to almost double the volume of LNG available to 12.5 mta by 2021. Naturgy is seeking to build on this solid LNG foundation with involvements in transfer technology and bunkering. The company was involved in another Cartagena bunkering operation in May 2018, when it collaborated with Hamburg-based Nauticor to provide six road tanker loads of LNG to power the 16,300 dwt, dual-fuel, chemical/product tanker Fure Vinga on the final leg of its delivery voyage from China to Sweden. Naturgy has also been working with Connect LNG of Norway to develop a ship-to-shore floating LNG transfer system called, variously, DirectLink and Universal Transfer System (UTS). The concept, aimed at opening up new small- to mid-scale market potential, enables ship/shore LNG transfers where jetty facilities are not required. A prototype UTS unit has been built and towed to Herøya in Norway for testing. Transfer applications include LNG discharges to barge-mounted regasification plants; loading operations to small ships at LNG export facilities whose jetties are not geared up for such vessels; loading from floating LNG production vessels in nearshore, benign waters; and LNG bunkering direct to LNG-powered ships without the need for LNG bunker vessels. Técnicas Reunidas (TR) has been involved with the design, engineering and construction of LNG liquefaction, regasification, storage and associated facilities since 1967. The 2010 contract to build the Zhuhai LNG receiving terminal in China for CNOOC marked the company’s breakthrough into the Asian market. TR has also been involved with fabricating four of Spain’s six operating LNG terminals: Cartagena, Huelva, Barcelona and Bilbao. More recently, TR has been contracted by Venture Global LNG to carry out the front-end engineering and design work required for that company’s 10 mta Calcasieu Pass LNG export project, proposed for Cameron Parish in the US state of Louisiana. The last of the six members of the Spanish Consortium hosting Gastech is Enagás, operator of five of the six operational Spanish LNG receiving terminals: the Bilbao, Huelva, Cartagena, Sagunto and Barcelona terminals. At Gastech, Enagás will be hosting a technical visit to its Barcelona LNG receiving terminal, the oldest regasification plant in Spain and continental Europe. Commissioned in 1969, the facility currently has six tanks offering 760,000 m3 of capacity. LNG

Enagás operates five of the six in-service Spanish LNG receiving terminals, including the Cartagena facility shown here

LNG World Shipping | September/October 2018


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US Gulf/Caribbean sub RUNNING AREA REPORT HEAD | 9

The inaugural import cargo approaches the Freeport terminal in Texas in April 2008; the facility is soon to begin exporting LNG

LNG carriers liven up US Gulf and Caribbean waters LNG carrier traffic throughout the Caribbean is on a steep growth curve, as US Gulf exports climb, regional import projects come onstream and Panama Canal transits rise

L

NGC transits of Caribbean waters are gaining ground and poised to erupt. The US is one-quarter of the way through the first phase of a huge build-up in LNG exports, while developers of several planned ‘second-wave’ US liquefaction plants are nearing final investment decisions. At the receiving end, new import terminals have opened in Colombia and Panama, while Jamaica is making ready to bring a floating regasification and storage unit (FSRU) into operation. The opening of expanded locks in June 2016 by the Panama Canal Authority (ACP) has provided a new conduit, and the waterway is accommodating a growing number of LNGC transits. Up until a decade ago the Caribbean region’s LNGC activities were limited to loadings at the Atlantic LNG terminal at Point Fortin in Trinidad & Tobago and occasional deliveries to the Lake Charles LNG terminal in the US state of Louisiana, the Peñuelas facility in Puerto Rico and the AES Andres terminal

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in the Dominican Republic. US LNG imports, through its four established terminals, began to pick up midway through the previous decade, as domestic gas supplies dwindled. However, these volumes peaked in 2007, just as the new US Gulf terminals of Sabine Pass LNG, Freeport LNG, Cameron LNG and Gulf LNG opened for business, in anticipation of a further massive growth in LNG import volumes. Their day in the sun was short lived, however, as the development of shale gas extraction technologies put paid to the US need for overseas gas. The new Gulf import terminals were quickly idled. It soon became apparent that the shale phenomenon was set to produce gas in quantities well beyond domestic needs and the operators of the US Gulf terminals decided to reinvent their installations as bi-directional facilities, with the addition of liquefaction trains. Their actions are poised to push the US up into third place in the LNG exporters league table, behind only

LNG World Shipping | September/October 2018


10 | AREA REPORT US Gulf/Caribbean

Qatar and Australia, by 2020.

Going bi-directional

Cheniere Energy’s Sabine Pass terminal became the first world-scale US LNG export facility and the first in the lower 48 states when it began loading cargoes in February 2016. Four Sabine Pass trains, each with the capacity to produce 4.5M tonnes per annum (mta) of LNG, are now in operation and loadings at the facility’s two jetties are now running at 20-22 per month. A fifth Sabine Pass train is nearing completion and a sixth is planned. The Cameron LNG and Freeport LNG import terminals are each being provided with three liquefaction trains, the first of which at each location is due onstream in 2019. Cheniere Energy is also constructing a three-train, greenfield LNG export terminal at Corpus Christi in Texas and in August 2018 US federal authorities gave the facility permission to begin processing gas in the first train. This implies that Corpus Christi Train 1 could be ready to commence commercial operations in Q4 2018, earlier than the original target date of H1 2019. By late 2020, when all these new liquefaction units are onstream, the US will have the capacity to export 65 mta of LNG, and just under 90% of the capability will be concentrated in the US Gulf states of Texas and Louisiana. Meanwhile, proposals for over 15 more US export terminals, virtually all in the US Gulf region, have been tabled. The most likely of this second wave of projects to come to fruition are Golden Pass LNG, Driftwood LNG, Calcasieu Pass LNG, Magnolia LNG and Sabine Pass Train 6. Golden Pass is an existing import terminal in eastern Texas, while Driftwood, Calcasieu Pass and Magnolia are all greenfield project proposals. Interestingly, the Driftwood, Calcasieu Pass and Magnolia schemes are all based on the use of multiple, mid-scale liquefaction trains at terminal sites near the mouth of the Calcasieu River in Louisiana. The five possible second-wave US Gulf projects hold the potential to produce another 50 mta of LNG, an additional volume that would push the US into the top spot among the world’s LNG export nations.

the 170,000 m3 FSRU Hoegh Grace stationed at the port of Cartagena. The project is enabling gas-fired power plants in the vicinity to be supplied. Neighbouring Panama received a commissioning cargo at its new LNG receiving terminal, the first such facility in Central America, in June 2018. The Costa Norte LNG terminal is located at Colón on the country’s Caribbean coast near the entrance to the Panama Canal and the inaugural shipment was delivered by the 154,000 m3 Provalys. The US energy company AES Corporation, the same firm that operates the Andres import terminal in the Dominican Republic, holds a 50.1% stake in the Costa Norte LNG-to-power project, while the remaining 49.9% is in the hands of Inversiones Bahia. The key customer of the new receiving terminal is AES Colón, an adjacent 381 MW combined cycle power plant. The new station forms part of Panama’s drive to lessen dependence on oil-fired power generation. However, the new power plant is likely to call on only one-quarter of Costa Norte’s LNG-handling capacity. The intention is to develop the terminal as an LNG distribution hub to serve other parts of Central America with small-scale deliveries. In August 2018, Panama signed an agreement with the US Treasury and Energy departments aimed at paving the way for more private investment in the distribution of US-produced LNG in Latin America. The intention is to dispatch US LNG discharged at the Costa Norte terminal onward to other countries in the region, including Guatemala, Honduras and Nicaragua, by means of road tankers, ISO tanks and small LNG carriers. Jamaica commenced LNG imports in 2016 in a deal signed between US-based

New Fortress Energy (NFE) and the Jamaican power utility JPS. NFE chartered the 138,000 m3 Golar Arctic for two years for use as a floating storage unit (FSU) and the 6,500 m3 Coral Anthelia to shuttle LNG to the Bogue power station in Montego Bay on the north side of the island. Jamaica is seeking to substitute the use of oil with gas in power generation to the greatest extent possible, and to meet that commitment the country’s LNGprocessing capabilities are being enhanced. NFE is chartering Golar LNG Partners’ 126,000 m3 FSRU Golar Freeze for 15 years starting in Q4 2018, for stationing at Port Esquivel on the south side of the island, to the west of Kingston. Gas from Golar Freeze will be piped ashore to fuel the new 190 MW Old Harbour Bay power plant. Some LNG will be transshipped from the FSRU to a shuttle tanker and transported to the upgraded, 140 MW Bogue power station. A third gasfuelled plant, of 94 MW, is being built in Clarendon for the Jamalco bauxite company. LNG deliveries from the US Gulf/ Caribbean region to customers worldwide have been greatly facilitated by the Panama Canal’s expanded locks. ACP reported that, as of end-July, 2018 some 4,000 Neopanamax vessels had transited the waterway in the two years since the new link was opened. The landmark 4,000th passage was made by an LNG carrier, Tsakos Energy’s 174,000 m3 Maria Energy. LNG carriers have accounted for about 10% of this total traffic, but such movements are growing in line with the rise of LNG exports from the US Gulf terminals. When the Canal authorities lift natural daylight restrictions for vessels in October 2018, two LNG carriers proceeding in opposite directions will be able to transit the waterway simultaneously. LNG

Caribbean importers

While the bulk of escalating US LNG exports is set for sale to distant customers, a growing volume will find a home in the Caribbean region. Colombia commenced LNG imports in December 2016 utilising

LNG World Shipping | September/October 2018

LNG filters through to Jamaica’s Montego Bay power plant by means of a shuttle tanker

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INDUSTRY LEADERS | 13

LNG top-table session in the sun It is rare for the major LNG carrier owners to all be in one place at the same time, but between Posidonia and the recent Capital Link event we got to hear from some of the key players on the main industry topics

Paul Wogan (GasLog): "If you believe that gas is cheap, clean and abundant energy source that many companies want to get access to, then you have to believe in the FSRU story"

P

osidonia is a huge shipping exhibition held every two years in early June in Athens. Attached to it are a series of conferences and balmy evenings at shipowners’ parties. Posidonia is organised by the Greek shipowners’ association and is, in effect, a celebration of Greek shipping. In recent years the US-based, Greek-owned conference organisation Capital Link has organised the Analyst & Investor Capital Link Shipping Forum on the first day of Posidonia. This year’s Forum was devoted to gas carrier shipping and on the panel were Tony Lauritzen, chief executive of Dynagas LNG Partners, Paul Wogan, chief executive of GasLog, Stavros Hatzigrigoris, managing director of Maran Gas Maritime, Harry Vafias, founder and chief executive of StealthGas, and Christos Economou, founder and chief executive of TMS Cardiff Gas. The panel was moderated by Espen Landmark Fjermestad, head of shipping equity research at Fearnley Securities.

China impact

Mr Fjermestad opened the discussion by setting the scene. According to his data, seaborne LNG shipments are growing seven times faster than the growth in pipeline gas exports. The fastest growth in LNG demand were shipments to China, where there was a 60% growth year-on-year in 2017, versus analysts’ earlier

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predictions of 20-30% growth. As his opening question to the panel, Mr Fjermestad asked if this growth level will continue. Mr Lauritzen pointed out that although China’s LNG import growth was spectacular, gas only represents 6% of the country’s energy mix. Nonetheless, the use of coal is being cut back under anti-pollution edicts and, as a result, the demand for LNG will grow as coal burning diminishes. Mr Wogan cautioned about sources when quoting statistics, pointing out that his organisation calculated that China’s year-onyear LNG import growth in 2017 was 46%. Nevertheless, he agreed that Chinese LNG imports would continue to grow strongly for the foreseeable future. “Once you make the change from coal to gas, you don’t go back,” he told the audience. The impact was clear; the panel acknowledged that Chinese LNG demand helped drive up spot rates by 50% in 2017, but agreed that the country’s gas-buying strategy will be more considered going forward. Over the first six months of this year, according to the panel, spot rates had increased from US$54,000/day to US$80,000/day. In addition, interest in period charters is rising. Ship availability was very tight during the 2017/18 winter months, noted Mr Fjermestad. The panel agreed the high vessel utilisation rates had helped drive demand for 18-month charters to cover the

LNG World Shipping | September/October 2018


14 | INDUSTRY LEADERS

risk of being short of a vessel when Chinese demand peaked. The panel was also in agreement regarding the impact of a trade war between the US and China. According to the panel host, 60% of the rising production from Cheniere Energy’s Sabine Pass terminal went to the Far East in 2017, but mostly to Japan and Korea. Sabine Pass accounted for only 3.5% of China’s LNG imports. However, there are work-arounds; a number of US-sourced shipments this year have been bought by traders and sold on to China via third parties. These are not affected by tariffs.

Time for new projects

While the LNG spot market is important, it is a by-product of longterm offtake arrangements. Mr Fjermestad cautioned that there had been very few final investment decisions (FIDs) on new LNG production output over recent years. Mr Wogan noted that, aside from the market uncertainty factor, there had been no FIDs due simply to the lack of available finance. One explanation for the lack of finance is that this is a product of the current phase of the credit cycle. Banks are under pressure to maintain and grow capital under the series of regulations introduced since the financial crisis of 2008. Internally, LNG projects are competing with other hard-asset projects, like real estate, aircraft and shipping, for funding. This explains why those LNG greenfield and expansion projects that do take place ultimately have state financing in some form or other. For an LNG project not backed by the state there is a requirement for 70-80% of the offtake to be secured to a solid customer. Mr Wogan noted that the recently taken decision by Cheniere to proceed with Train 3 at its new Corpus Christi terminal had 80% of the offtake secured. It may be that future FIDs will be taken with a lower level offtake, and more sold spot. One issue is the price of LNG; as more projects come on stream, the spot price of LNG will reflect the emergence of a more mature market and the availability of a greater level of supply, rather than being indexed or linked to other energy prices, like the crude oil price minus a constant. Looking ahead, the panel agreed there was a deficit of LNG carriers, but there was no agreement on what number of ships would be required by what date. Opinions varied on the number

of new orders that would need to be placed over the next 12-18 months, from 32 to 62 vessels. The panel moderator suggested that to cover the medium term and the buildout of projects with FIDs, around 30 new LNGCs were required for entry into service in the 2020-21 period. However, there is hidden capacity in the existing fleet. Analysis shows that while LNGCs engaged on long- or medium-term charters sail at an average speed of 19.5 knots, those same vessels re-let into the spot market or on short-term contracts are only sailing at an average speed of 14.5 knots.

Engines and FSRUs

Mr Fjermestad posed another interesting question: which of the two available dual-fuel, two-stroke propulsion system technologies is better, MAN’s ME-GI or Winterthur Gas & Diesel’s X-DF? Mr Hatzigrigoris of Maran Gas, a shipowner that has chosen the ME-GI option, explained his company’s specification was not standard. “Our ME-GI arrangement is slightly different in that we have two high-pressure compressors instead of one and full rather than partial reliquefication. Although ME-GI engines have their advantages, the high, 300-bar fuel-injection pressure calls for specialist fuel gas supply systems.” The last discussion involved the floating storage and regasification unit (FSRU) market. Mr Wogan stated that as the FSRU fleet and regas vessel project numbers have grown, the rates commanded by such ships have fallen; but, then again, so have newbuilding prices. “I think there is a short-term overhang of ships,” he said. “Some FSRUs were ordered prematurely, against projects that did not reach fruition. However, if you believe in the thesis that gas is a cheap, clean and abundant energy source that many companies want to get access to, then you have to believe in the FSRU story, as it is the quickest and most cost-effective way to get gas into a market. “We are confident that FSRUs are going to play a major part in the gas industry and will give decent returns,” Mr Wogan concluded. “It is all about the unit freight cost. We have put reliquefaction plants on our LNG carriers with dual-fuel dieselelectric (DFDE) propulsion systems, for example, and in terms of what the customer wants and our internal rate of return, it makes sense.” LNG

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LNG World Shipping | September/October 2018

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LNG BUNKER VESSELS | 17

LNG bunker vessel fleet increases to 18 mark LNG World Shipping’s monitoring of the LNG bunker vessel (LNGBV) fleet shows there are now six such vessels in service and a further 12 on order

Recent modification work has transformed the coastal LNG carrier Coral Methane into an LNG bunker vessel

L

NG ship-to-ship (STS) bunkering is now in its fifth year, as the 180-m3 LNG bunker vessel (LNGBV) Seagas, a converted small Norwegian ferry, entered into service in Stockholm harbour in 2013 to fuel the passenger/car ferry Viking Grace with 70 tonnes of LNG most days of the week. Yet until last year Seagas remained the sole practitioner of this method of fuelling LNG-powered ships. It was only in 2017 that the new LNGBV era really began to take hold, when the first three purpose-built LNG fuellers entered service. The trio are Zeebrugge-based, 5,000-m3 Engie Zeebrugge, 6,500-m3 Cardissa in Rotterdam and 5,800-m3 Coralius, serving in the western Baltic Sea, including the Skagerrak. These inaugural ships, and the many other LNGBV newbuildings set to follow, are enabling the growing fleet of gas-powered ships to be fuelled in a safer and more timely and efficient manner than is possible with jettyside truck-to-ship LNG transfers. For the large dual-fuel ships on quick port turnaround timetables now entering service, LNGBVs are recognised as the only viable option. Last year was also notable for the newbuilding contracts for four

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7,500-m3 coastal LNG carriers, comprising two for Korea Line and two for Stolt-Nielsen Gas, and all scheduled for 2019 completions. Although only one of the Korea Line ships has been definitively earmarked for LNGBV duties, all four are set to be provided with the ability to carry out STS fuelling operations. The 2017 newbuilding contracts complemented an order for a new LNGBV placed in 2016. This is the 7,500-m3 LNGBV Kairos that Korea’s Hyundai Mipo yard is building for Babcock Schulte Energy, a Bernhard Schulte Shipmanagement/Babcock International joint venture. Kairos is due for commissioning in September 2018 and is profiled on page 21 of this issue. With Klaipeda in Lithuania serving as its home port, Kairos will be chartered by Blue LNG, a Nauticor/Klaipedos Nafta joint venture. Clients will include Gothia Tanker Alliance, the Swedish operator of a fleet of regional North/Baltic Sea chemical/product distribution tankers that run on LNG.

Brisk start to 2018

As the new year commenced, LNGBV fleet developments continued apace. During the first five weeks of 2018 an LNGBV almost three

LNG World Shipping | September/October 2018


18 | LNG BUNKER VESSELS

LNG BUNKER VESSEL FLEET DELIVERY DATE

CAPACITY (m3)

SEAGAS

2013

180

ENGIE ZEEBRUGGE

2017

5,000

CARDISSA

2017

6,500

CORALIUS

2017

5,800

OIZMENDI

2018

600

CORAL METHANE

2018

7,500

KAIROS

2018

7,500

CLEAN JACKSONVILLE

2018

2,200

FLEXFUELER1

2018

760

STOLT-NIELSEN GAS

2019

7,500

STOLT-NIELSEN GAS

2019

7,500

KOREA LINE

2019

7,500

KOREA LINE

2019

7,500

VICTROL/CFT

2019

3,000

TOTAL/MOL

2020

18,600

Q-LNG

2020

4,000

FUELNG

2020

7,500

CLS JAPAN

2020

3,500

times the size of any such vessel yet built was ordered, while the first Spanish LNG STS fuelling operation, utilising a newly converted bunker barge, was carried out in Bilbao. The Bilbao barge is Oizmendi, originally a 3,200-dwt pollution control vessel but now converted to a multipurpose bunkering station. In addition to its underdeck oil tanks, Oizmendi has been provided with two 300-m3, deck-mounted, Type C LNG tanks. The Spanish bunker vessel carried out its first gas-fuelling STS operation on 3 February 2018 when it transferred 40 tonnes of LNG to the cement carrier Ireland. Following this transfer, Oizmendi was relocated to Huelva in southern Spain where it is being utilised as an oil and LNG fueller. The LNGBV newbuilding that is three times bigger than any other such vessel is the 18,600-m3 gas tanker Total Marine Fuels Global Solutions and Mitsui OSK Lines contracted at the HudongZhonghua yard in China for delivery in 2020. Total has won the contract to supply the 300,000 tonnes per annum of LNG needed to power the fleet of nine new 22,000 TEU dual-fuel container ships ordered recently by the French liner operator CMA CGM. It will utilise its Hudong newbuilding to fuel the box ships, each of which will have an LNG bunker tank of 18,600 m3 in capacity.

LNG World Shipping | September/October 2018

Both the cargo tanks on the bunker vessel and the bunker tank on each of the CMA CGM container ships are being built to the GTT Mark III membrane design. As a result, the Total bunkering operations will involve LNG bunker transfers at atmospheric pressure. All other STS LNG bunkering operations carried out to date have been from one IMO Type C pressure vessel tank to another.

More deliveries

Another ship conversion project has yielded a ‘new’ LNGBV. Anthony Veder’s 7,500 m3 LNG carrier Coral Methane is currently at the Remontowa yard in Poland to be provided with a fuelling capability through the integration of specific bunkering equipment into the cargo-handling arrangements. Shell is chartering the vessel to carry out STS fuelling operations in the southern part of the North Sea and the Mediterranean. Also set for 2018 deliveries are 2,200 m3 Clean Jacksonville, a nonpropelled vessel which will be North America’s first seagoing LNG bunker barge, and Titan LNG’s FlexFueler1 pontoon. The latter newbuilding has been designed to fuel gas-powered inland waterway and small seagoing vessels throughout the Antwerp-RotterdamAmsterdam region and will initially be positioned in Amsterdam. FlexFueler1 will be provided with two 380 m3 LNG tanks initially, but a further two tanks could be installed should market demand warrant it. Clean Jacksonville will be stationed in the Florida port of Jacksonville and TOTE Maritime’s two new 3,100 TEU Marlinclass, LNG-powered container ships that sail regularly to Puerto Rico will be the anchor customers of the vessel’s cryogenic fuelling services. Clean Jacksonville has a GTT Mark III cargo tank and is the first LNGBV to feature a membrane containment system.

Shell-centred

Shell, operator of Cardissa and charterer of Coral Methane, is set to have its LNGBV fleet further augmented. Long-term charters with the energy major have supported orders for a 3,000 m3 LNG bunker barge being built for a Victrol/CF T joint venture and a 4,000 m3 barge that will be an integral part of an articulated tug/barge (ATB) under construction for Quality LNG Transport (Q-LNG). The Victrol/CF T LNGBV will be stationed in Rotterdam and used to fuel inland waterway vessels while Shell will employ the Q-LNG ATB to supply LNG as marine fuel along the southeastern US coast. Most notable among the ATB’s customers will be the new generation of LNG-powered cruise ships now under construction that will be homeported in Florida. Two Carnival Cruise ships will be the LNGBV’s foundation customers. Shell is also partnering with Keppel Offshore & Marine in FueLNG, a joint venture which ordered, in June 2018, what will be Singapore’s first LNGBV. The 7,500 m3 gas carrier is under construction at the Keppel Singmarine yard at Nantong in China, with a target completion date of Q3 2020. Although additional LNGBV newbuilding contracts appear to be imminent, the last ship on our fleet list as a confirmed order is a 3,500 m3 fueller contracted by Central LNG Shipping Japan Corp at Kawasaki Heavy Industries in July 2018. To be Japan’s first LNGBV, the vessel will serve LNG-powered ships visiting the country’s central Chubu region around Nagoya and Ise Bay. The four participants in the CLS joint venture are K Line, Chubu Electric Power, Toyota Tsusho Corp and NYK Line. LNG

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LNG BUNKER VESSELS | 21

Kairos set to augment nascent LNG bunker vessel pool LNG World Shipping had the opportunity to ask Angus Campbell* of Bernhard Schulte and Andrew Scott* of Babcock about their new joint venture LNG bunker vessel Kairos

The distinctive forward deckhouse on Kairos facilitated a ship design that obviated the need for sea water ballast

LNG World Shipping: We understand that Kairos will be able to function as both an LNG bunker vessel (LNGBV) and a coastal distribution tanker. Do you intend to operate the ship in both roles from the outset? Babcock Schulte Energy (BSE): The number of LNG-fuelled ships is growing steadily. To ensure that Kairos is fully utilised as this number builds, it is likely that she will perform both roles from the outset. As a result, we developed a design capable of performing ship-to-ship (STS) bunkering and transshipment operations to allow maximum flexibility whilst in service. BSE believes that the number of small-scale LNG opportunities will increase as transportation and industry turn to cleaner fuels. As we approach January 2020 and the new 0.5% global sulphur cap, fuel choice is important. Natural gas is a viable solution, providing a bridge between the hydrocarbon and hydrogen economies whilst new ways of decarbonising shipping are developed. LNG World Shipping: What parameters determined the LNGcarrying capacity of 7,500 m3 and the STS transfer rate of up to

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1,250 m3/hour? BSE: The volume of 7,500 m³ was determined by considering the charterer’s required guaranteed delivery volume of LNG and the minimum sailing distance using LNG as fuel, either boil-off gas (BOG) or vaporised liquid, with sufficient heel to maintain the tanks in a cold condition ready to load the next cargo. The transfer rate, which has a range from 60 m³/hour up to 1,250 m³/hour, achievable by a combination of different sized pumps and variable speed drive, was again determined by considering the wide range of customers that the charterer may service and the fact that for some vessels – including ferries, cruise and container ships – the time available for fuelling is limited by a strict timetable. LNG World Shipping: What factors determined the choice of Wärtsilä four-stroke dual-fuel engines for the vessel and the CNG tank for returned BOG? BSE: The Wärtsilä four-stroke dual-fuel engines were selected due to their good performance credentials and mature service history.

LNG World Shipping | September/October 2018


22 | LNG BUNKER VESSELS

In this new market, it will be essential to keep downtime as low as possible and to achieve this, Wärtsilä will be providing remote diagnostics and worldwide support. Kairos’s fuel system is integrated with the cargo systems, allowing BOG and flash gas, which would otherwise be lost during operations, to be collected as compressed natural gas (CNG), and used as fuel. However, when CNG is not available, LNG can be vaporised and provided as fuel to the engines.

LNG World Shipping: What is the duration of the Blue LNG charter of Kairos? BSE: As you will appreciate, this is commercially sensitive. Following normal practice, the time charter has an initial firm period, plus a number of option periods that can be exercised by the charterer. We are working closely with Blue LNG to provide efficient service and safe operations throughout the charter period.

LNG World Shipping: How do the choices of a forward accommodation superstructure and a ballast-free arrangement interrelate? How will the choices benefit the crew and ship operations? BSE: The forward accommodation was developed to overcome issues with forward visibility, as required by the Safety of Life at Sea (SOLAS) Convention. Moving the accommodation forward overcame the LNGBV design constraints relating to line-of-sight from the wheelhouse and also had the benefit of longitudinally balancing the ship. Coupled with the low-density LNG cargo, this design removed the need for sea water ballast and associated treatment systems. Only a limited volume of permanent fresh water ballast is used for trim purposes.

LNG World Shipping: Is it intended that Kairos will be the first of many LNG bunker vessels in the BSE fleet? Can you describe, in very general terms, how the key design features of Kairos may need to be altered to accommodate other LNG bunkering applications/locations? BSE: BSE is involved in numerous potential small-scale LNG projects. The key starting point for each project is to analyse what the ship will be required to do, allowing the development of a detailed operational profile in partnership with the charterer and final recipients of the LNG. Following this, the design and capabilities of the ship can be determined. Many potential projects require greater cargo capacity, Type C or membrane cargo containment, reliquefaction or subcooling instead of CNG or double-hull design. As a result, design parameters will be optimised, depending on project requirements. We view this as part of the development of the nascent global LNG fuelling infrastructure, with differing customer requirements emerging and the small-scale LNG sector providing safe and appropriate solutions for each project/location. LNG

LNG World Shipping: Please describe briefly the vessel’s manifold set-up and how this will be able to accommodate a range of terminal jetty arrangements and ship sizes. BSE: To cater for a wide range of potential receivers, Kairos has a low-level loading/unloading manifold on the port-side, forward of midships, and a stern offloading manifold, in addition to the conventional port and starboard midships manifolds. The midships and port-side manifold will enable Kairos to load and offload at any of the current LNG terminals, floating storage and regasification units (FSRUs) or floating storage and offloading units (FSUs). In situations where the position of the receiving ship’s bunker station and the parallel body of the receiving ship would not allow Kairos to safely moor alongside and transfer LNG from the midships transfer station, she can utilise the stern offloading station to facilitate a safe and secure mooring arrangement.

* Angus Campbell is corporate director energy projects at Bernhard Schulte Shipmanagement and Andrew Scott is business development director at Babcock International Group. The delivery of Kairos is expected in the next few months.

LNG World Shipping: We understand that BSE has developed its own proprietary cargo transfer system for Kairos. Please briefly describe the system and the factors determining the arrangement. BSE: The objective was to produce a robust, safe and straightforward transfer system for the crew to operate, which could accommodate the variations in bunker station location and size that were anticipated on receiving ships. The transfer system is based around liquid, vapour and nitrogen purge hoses, safely stowed and manipulated from a powered reel. The liquid and vapour hoses are each fitted with quick connect/dry disconnect (QC/DC) and powered emergency release couplings (PERC) to support efficient operation and safe emergency disconnection, respectively. As a number of the receiving ships have the bunker station connection points inboard, the transfer system is fitted with tail piece hoses to ensure that the PERC, when activated, cannot be trapped in the bunker station. The hoses are passed to the receiving ship using the onboard knuckle boom cranes. During the transfer operation, the crane fully supports the hoses and, in the event of PERC activation, ensures that the hoses are held safely and securely.

LNG World Shipping | September/October 2018

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ARCTIC LNG LOGISTICS | 25

Streamlining Arctic LNG routes to market Novatek is planning strategic new transshipment hubs, while having its Arc7 LNGCs spend more time in the ice, as it develops a new project and drives down transport costs

T

he first eastbound cargoes despatched by Novatek from its Yamal LNG terminal at Sabetta in the Russian High Arctic arrived at PetroChina’s Rudong receiving facility in China’s Jiangsu province on 19 July 2018. The two shipments were also the first LNG consignments to be transported in an easterly direction along the Northern Sea Route (NSR) without the assistance of an icebreaker escort. The ground-breaking cargoes, on board the 172,000 m3 LNG carriers Vladimir Rusanov and Eduard Toll, were made possible by the start of the summer navigation season in the Arctic and the attendant thinning of the ice cover in northern polar waters. The vessels completed their summer eastbound journey in 19 days, with navigation in ice limited to only nine days. A westbound Yamal shipment to Asia, by means of a cargo transshipment to a conventional LNG carrier in European waters and passages through the Suez Canal and the Strait of Malacca, takes 35-40 days to complete. Novatek estimates that the transport cost for an easterly run along the NSR, from Sabetta to Guangdong in southern China, is US$64 per tonne of LNG. In contrast, the westerly route for that shipment between the same ports, but involving cargo transshipment at Zeebrugge and Suez Canal transit fees, entails costs of US$91.50 per tonne.

ice cover season, which stretches from late November to June. Westbound shipments in Arc7 ships, even in winter months, do not require icebreaker escorts, whereas such escorts are stipulated for Arc7 ships travelling east from Sabetta to Asia during the November-June period. In the summer months, when the ice cover thins, the Arc7 LNGCs are able to travel eastbound along the NSR without the need for a dedicated icebreaker escort. Asia is the principal market for LNG and the ability of these specialised ships to make direct eastbound deliveries during the summer months will be well utilised. PetroChina, the owner of the Rudong terminal, also has a 20% stake in the Yamal project through its parent China National Petroleum Corp (CNPC), and has signed up for 3 mta offtake from the terminal over the long term. There is bound to be interest in Yamal cargoes from other Chinese buyers, especially during the summer season. In addition, China’s Silk Road Fund controls 9.9% of Yamal LNG and Chinese shipping companies hold ownership stakes in

Breaking the ice with LNGCs

Vladimir Rusanov and Eduard Toll are part of a fleet of 15 icebreaking LNGCs that Daewoo Shipbuilding & Marine Engineering (DSME) is building to the Arc7 ice class specifically for the US$27Bn Yamal LNG project. The vessels can proceed, unassisted, through ice up to 2.1 m thick on a continuous basis. So far, five have been delivered and are in service. As of early August 2018, the five ships had transported 47 cargoes aggregating more than 3.5M tonnes of LNG since Yamal Train 1 commenced operations in December 2017. The inaugural cargo was delivered to a European terminal on board the first of the Arc7 series, Christophe de Margerie. Completions of the five ships have tied in with the ramp-up in production of the first of three 5.5M tonnes per annum (mta) LNG liquefaction trains at Sabetta. Novatek’s basic LNG delivery strategy for the Yamal project is to send cargoes westbound to Europe during the winter heavy

www.lngworldshipping.com

Novatek is seeking to narrow the seasonal window during which its Arc7 LNGCs would require an icebreaker escort when running eastbound along the Northern Sea Route

LNG World Shipping | September/October 2018


26 | ARCTIC LNG LOGISTICS

14 of the 15 Arc7 LNGCs. Novatek’s ship chartering activities will not be restricted to the Arc7 icebreakers. The company is also taking on 11 additional LNG carriers, comprising a mix of conventional vessels and those of the lesser, Arc4 ice class, equivalent to the Finnish Swedish 1A designation. These additional ships will be utilised to load cargoes at Sabetta at certain times of the year and to load transhipped cargoes from the Arc7 vessels in higher latitudes, enabling the icebreaking LNGCs to maximise their time in the icy waters for which they were designed.

Neighbourly Arctic LNG 2

Novatek also plans to mount a second LNG export project, Arctic LNG 2, in Ob Bay, not far from Sabetta. For the loading terminal, the scheme would make use of three gravity-based platforms, each with a liquefaction plant and 213,000 m3 of LNG storage capacity, connected and sitting on the seabed. The three-train Arctic LNG 2 facility would have a production capacity of 18.3 mta and Novatek is aiming for a Train 1 start date in 2023. The independent Russian gas company estimates that, through the use of offsite modular construction techniques, its own proprietary liquefaction process and slightly larger trains for the Arctic LNG 2 scheme, it can save 30% in the cost per tonne of LNG produced compared to the Yamal scheme. The fact that the Arctic LNG 2 project will require the transport of a similar volume of LNG has prompted Novatek to rethink its overall shipping operation. The underlying drive in the reappraisal of shipping arrangements for two Ob Bay LNG export projects is to lower logistics costs. Novatek regards the key elements of the initiative to be the construction of a new generation of icebreaking LNGCs that cost less than the Yamal Arc7 ships; more efficient use of the NSR, with longer navigation periods; decreased dependency on expensive escort icebreakers; and new, strategically-located transshipment hubs. Although new icebreaking LNGCs will be needed, Novatek is hoping that it will also be able to make some use of the 15 original Yamal ships on the new project. Such aspirations will

be supported by the construction of new eastern and western transshipment hubs. For the eastern transfer station, the plan is to moor a new LNG storage vessel with capacity to handle 20 mta at an offshore jetty in Mokhovaya harbour in Kamchatka’s Avacha Bay, about 4,000 nautical miles from Sabetta. Novatek is carrying out front-end engineering design (FEED) work on the hub scheme and the intention is to follow that up with a green light for the project, to enable operations to commence in 2022 or 2023. For the western transshipment centre, ship-to-ship transfer operations near Murmansk have been mooted. The east and west transshipment hubs would provide Novatek with the ability to release the Arc7 ship cargoes shortly after the vessels emerged from any ice-covered waters, thus enabling them to return to Ob Bay to load a new cargo at the earliest opportunity.

Onwards with Yamal

Meanwhile, back at Sabetta, developments have been continuing apace. Christophe de Margerie followed Vladimir Rusanov and Eduard Toll by loading the third eastbound Yamal cargo for China. The ship set a new record for a July transit of the NSR in an easterly direction by emerging at Cape Dezhnev only seven days and 17 hours out from Sabetta, averaging 12.8 knots over the 2,360 nautical mile journey. Christophe de Margerie went on to deliver its cargo at PetroChina’s Tangshan terminal in Bohai Bay, 18.5 days after leaving Sabetta. In early August 2018 Novatek commissioned the second of the three liquefaction trains at its Yamal LNG terminal. The start was six months ahead of schedule and the train’s inaugural cargo was carried westbound along the NSR to Europe by the 170,000 m3 LNG carrier Pskov, a Russian ice class Ice2 vessel (equivalent to an Arc4 rating) on charter to Gazprom and now sublet to Novatek. The third 5.5 mta Yamal train is also ahead of schedule and is set to begin producing LNG “no later than early 2019”. Novatek has recently decided to build a smaller, fourth train, of 0.9 mta, at Yamal LNG’s Sabetta site. Set for a late 2019 completion, this unit will employ the company’s proprietary liquefaction technology that will be utilised for the Arctic LNG 2 project, effectively serving as a testing ground. LNG

On its first eastbound Northern Sea Route voyage, Christophe de Margerie averaged 12.8 knots on the 2,360 nautical mile run from Sabetta to Cape Dezhnev

LNG World Shipping | September/October 2018

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FSRU UPDATE | 29

Bringing floating LNG regasification up to date FSRU projects are under development on six continents and while some regas vessel facilities have come full circle and are shutting down, new schemes far outweigh the closures

T

he latest floating storage and regasification unit (FSRU) project to come onstream is that for Petrobangla off Moheshkhali Island. When the 138,000 m3, 2005-built Excellence began pumping its regasified cargo ashore via a subsea line in August 2018, Bangladesh became the world’s 41st LNG import nation. As a result of FSRU projects, 13 countries have joined the LNG importers club, while another three nations have added FSRU-based terminals to their existing complement of shore-based facilities. Looking to the future, four countries are moving ahead with plans to implement their first FSRU scheme, while a further 12 are evaluating proposals prior to a final investment decision. FSRUs enable gas buyers to commence LNG imports much more quickly and at lower cost than is possible with shore terminals. The flexibility inherent in such vessels, most notably the ease of reassigning them to a new project, enables buyers to import LNG to cover a variety of situations. For instance, a country’s traditional reliance on hydropower may be compromised by a drought, necessitating gas imports to fill the gap, or it may be necessary to turn to short-term purchases until domestic demand has grown enough to warrant construction of a large shore terminal. Elsewhere, FSRU imports may suit an energy company with limited supply requirements, or one that is anxious to

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Golar Winter was only five years old when the Keppel yard completed its conversion for use as regasification vessel in Brazil

switch, for environmental reasons, from burning coal or oil fuel. Another possible FSRU scenario is the Egypt example, where regas vessels were temporarily used until the development of domestic energy resources reached a stage where there was no longer a need for further imports.

Growth trend hiccup

There are now 27 FSRUs in service and 11 on order. Just short of 35M tonnes of LNG was processed by FSRUs in 2017. Although the volume of LNG handled by FSRUs increased by about 8% compared to the previous year, the FSRU share of the global LNG import market fell slightly in 2017, to just under 12%. This was the first time that the FSRU share of the LNG market had stopped growing since regas vessel projects were initiated in 2008. The percentage decline was due to the jump in the volume of LNG

handled by new and existing shore terminals. While the FSRU sector is set for continued growth over the longer term, there have been setbacks along the way. Schemes planned for Chile, Ghana, Ivory Coast, Croatia and Puerto Rico have been delayed, while Abu Dhabi states that it no longer requires the FSRU previously moored in Ruwais. Some FSRU terminals have yet to be utilised to the extent originally envisaged, while others, most notably those in Brazil, Argentina and Egypt, have been handling greatly reduced throughputs in recent years. Egypt’s two FSRUs were extremely busy for a couple of years but new domestic gas finds are set to bring an end to LNG imports and a rebound in export shipments by the country’s two idled liquefaction plants. Even the new Bangladesh project, which utilises a submerged turret loading

LNG World Shipping | September/October 2018


30 | FSRU UPDATE

(STL) buoy for the discharge of regasified cargo, has not been without startup problems. Excellence had arrived on station with a cargo for regasification two months earlier, but was unable to commence operations due to a combination of factors, including rough weather, pipeline construction delays and technical issues.

Readying new players

Yet for each FSRU setback there are two new regas vessel projects being tabled. And for every existing FSRUbased terminal that appears to have put its best days behind it, there is a new, virtually unheralded scheme that has been established by its principals in record time and commences regasification work seemingly out of the blue. Of course, the big safety valve for new, purpose-built FSRUs is that they can be utilised as conventional LNG carriers in global LNG trading until specific work as a regas vessel has been lined up. Two FSRUs are currently under construction at Hyundai Heavy Industries for deployment in Turkey. One of the newbuilds will free up MOL FSRU Challenger, at 263,000 m3 the world’s largest FSRU and currently employed in Turkey at Dörtyol near Iskenderun. The 2017-built Mitsui OSK Lines (MOL) vessel has already been lined up for its next role, as Hong Kong’s first FSRU under charter to CLP Power, beginning in late 2020. Other FSRUs currently on order are earmarked for new projects in Brazil, Pakistan, India and Russia. In

addition, Dynagas has two FSRUs under construction which it contracted speculatively, while BW LNG, Maran Gas and Höegh each has one such unfixed vessel on order. There is no shortage of regas vessel schemes under development that could absorb these newbuildings and go on to spur further FSRU shipbuilding orders. In recent months separate FSRU-based import terminals have been proposed

"FSRUs enable gas buyers to commence LNG imports much more quickly and at lower cost than is possible with shore terminals"

for the Australian states of New South Wales, Victoria and South Australia, while Lebanon is also looking at the possibility of three FSRU terminals. Despite the fact that new liquefaction plants in Queensland, Western Australia and Northern Territories are about to propel the country into the top spot as the world’s leading LNG exporter, Australia’s principal population centres in the southeast are not linked to these gas riches. FSRUs are deemed the optimum way to bring this clean-burning fuel to Australia’s gasdeficient states in a timely fashion.

Höegh LNG’s Independence brings regasification vessel operations to Lithuania, the Baltic Sea and Northern Europe

LNG World Shipping | September/October 2018

Knock-on effects

Meanwhile, China National Offshore Oil Corp (CNOOC) has chartered Höegh LNG’s 170,000 m3 FSRU Hoegh Esperanza for three years. The charterer has the option of utilising the ship as both a conventional LNGC and an FSRU at its Tianjin terminal in northern China. Hoegh Esperanza became available when the GNL Penco project in Chile, for which it had been earmarked under a 20-year contract, suffered delays. The use of Hoegh Esperanza at Tianjin makes available Total’s 145,000 m3 GDF Suez Cape Ann, the FSRU previously used at the terminal. GDF Suez Cape Ann’s regas capabilities were quickly snapped up. H-Energy has chartered the vessel as India’s first floating LNG terminal, at the port of Jaigarh in Maharashtra state. The FSRU is scheduled to start receiving LNG in late 2018. India’s second FSRU-based import project will be developed by Swan Energy at Jafrabad in Gujarat state. The company has a 180,000 m3 FSRU under construction at Hyundai Heavy Industries in Korea for delivery in 2019. The regas vessel will operate in tandem with a floating storage unit (FSU) and MOL, which is participating in the scheme, is lining up one of its older LNGCs for the role. Back in Brazil, while throughputs at the established FSRU-based terminals of Guanabara, Pecem and Bahia may have declined in recent years, the regas vessel concept is poised to enjoy a renaissance through two new gas-to-power projects, at the ports of Açu and Sergipe. BW LNG was the lowest bidder in a tender to provide an FSRU for Prumo Logistics, a company which plans to use LNG to feed a new power plant it is building at Açu. Prumo will work with BP to develop the FSRU mooring facility. The target start date is 2023. Sergipe will be online much sooner. Golar Power, a 50/50 joint venture between Golar LNG and Stonepeak Infrastructure, will charter the 170,000 m3 Golar FSRU Golar Nanook to Centrais Elétricas de Sergipe (CELSE) for 26 years for use in supplying a large new gas-fired power station. Under construction at Samsung Heavy Industries, Golar Nanook is due for completion in September 2018. The vessel is expected at its Sergipe submerged soft yoke mooring site early in 2019 where commissioning work will be carried out. The power plant is set for an early 2020 start. Ocean LNG, a 70/30 Qatar Petroleum/

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FSRU UPDATE | 33

Turkey welcomes the 263,000 m3 MOL FSRU Challenger, the world’s largest FSRU, in November 2017

ExxonMobil venture, will supply the FSRU with LNG, with the delivery tanker transferring cargo in the side-by-side position. A full cargo will enable the FSRU to feed the power plant continuously for 17 days.

FSRU conversions

There is currently a resurgence of interest in the conversion of LNG carriers into FSRUs. Conversions offer an even quicker and cheaper route to project realisation than FSRU newbuildings. The Alexandoupolis FSRU project in northern Greece is aiming for a final investment decision by the end of 2018. Bulgarian Energy Holding is poised to join the initiative and GasLog, which has acquired a 20% interest in the project from the scheme’s operator Gastrade, is set to convert one of its conventional LNGCs into an FSRU to serve as the project's import facility. Another LNGC-to-FSRU conversion project now getting underway, on a speculative basis and with no definitive application in mind, stems from the recent decision by BW LNG to convert its 162,500 m3, 2009-built BW GDF Suez Paris into a floating regas vessel at the Keppel yard in Singapore. Conventional thinking has it that older LNG carriers make the best FSRU conversion candidates. As ageing LNGCs do not command freight rates as high as those offered to newer vessels in conventional trading, a switchover to regasification duties offers a veteran a new lease of life, as well as a healthy and steady late-in-life revenue stream for the owner. Yet BW GDF Suez Paris, a GTT NO 96 membrane tank ship built by Daewoo

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Shipbuilding & Marine Engineering (DSME), is not that old. Also, it is powered by a dual-fuel diesel-electric (DFDE) propulsion system, an arrangement that still commands relatively healthy freight rates for conventional LNGCs. In fact, DFDE propulsion systems are favoured for FSRUs, even newbuilding vessels. The improved fuel consumption figures provided by the new generation of dual-fuel, two-stroke engines are not so critical for regas vessels, due to the predominantly stationary nature of their employment.

"The big safety valve for new, purpose-built FSRUs is that they can be utilised as conventional LNG carriers in global LNG trading until specific work as a regas vessel has been lined up"

Because the DFDE propulsion system only began to make its mark in the LNGC fleet midway through the previous decade, ships so powered are relatively young. Thus, there should be no need to consider an extensive design evaluation of the ship structure and membrane tank containment system if considering such a vessel for an FSRU conversion. The new intended service life as a regas vessel should not exceed the 40 years’ fatigue life to

which the cargo containment system has been designed. Those membrane tank ships whose cargo containment system was provided with enhanced reinforcements at the newbuilding stage, to minimise the risk of sloshing damage, would be looked upon with special favour as an FSRU conversion candidate. The converted FSRU’s power plant will also need to handle the excess boil-off gas (BOG) volumes generated during the shipto-ship transfers of LNG from the delivery tanker. The possibility of these BOG volumes being over and above the ability of the vessel’s gas combustion unit (GCU) to cope with will need to be studied before proceeding with a conversion. Solutions include a re-evaluation of the membrane tank containment system, to see if the tanks could be safely assigned a higher maximum vapour pressure rating, of up to 0.7 bar, and the provision of a means to oxidise any excess vapour still arising. Keppel is expected to complete the transformation of BW GDF Suez Paris into an FSRU by the end of 2018. It will be provided with the capacity to regasify up to 5.6 mta of LNG. FSRU conversions are also being considered by Total and Croatia LNG for their proposed LNG terminals at Vridi near Abidjan in Ivory Coast and at Krk Island’s Sepen Bay, respectively. Both projects have suffered delays and it is believed that FSRU conversions provide the optimum solution when facing the challenge of raising the necessary finance. Golar is involved with the Total consortium developing the Ivory Coast scheme and would provide the FSRU. LNG

LNG World Shipping | September/October 2018


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NAKILAT/N-KOM REPORT| 35

Complementary LNG forces to the fore in Qatar Ras Laffan is home to the world’s most productive LNG liquefaction complex, the world’s largest LNGC fleet and the world’s newest LNGC repair yard The Shipping Corporation of India’s 2004-built, 136,000 m3 Raahi, in for a routine drydocking at Ras Laffan’s N-KOM yard

L

ocated within the Erhama Bin Jaber Al Jalahma Shipyard complex at Ras Laffan in northern Qatar, the joint venture Nakilat-Keppel Offshore & Marine Ltd (N-KOM) facility has successfully delivered in excess of 800 marine and offshore projects since the first LNGC drydocking in April 2011. N-KOM has leveraged the extensive experience and technical know-how of its parent companies to become recognised as an expert in handling gas carriers and a variety of other vessels. The company offers a comprehensive range of repair, conversion, maintenance and fabrication services to the marine, offshore and onshore sectors, while its track record of safe, quality and timely deliveries has helped the facility win new and repeat business.

Cavalcade of LNGC repairs

The N-KOM shipyard has attracted numerous LNG carriers for routine docking and membrane tank repair and maintenance work so far in 2018. Among the LNG carriers repaired are vessels from Shipping Corporation of India (SCI), Maran Gas Maritime, Nakilat Shipping Qatar Ltd (NSQL), Teekay Shipping, Shell, MOL LNG Transport, K-Line Shipmanagement and NYK LNG Shipmanagement. Most of these vessels underwent routine drydocking and repairs such as cargo tank inspections, overhauling of main engine cylinders, LNG cargo and spray pump servicing, general steel repairs, and hull treatment and painting. In addition, load tests for

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lifeboats and other related inspections have been carried out. Evidence of the N-KOM yard’s popularity with LNG shipowners and managers can be seen in the fact that the facility has been fully booked for repairs in the months of July and August 2018. N-KOM has two graving docks and one floating dock able to accommodate LNG carriers of up to the 266,000 m3 Q-max size, as well as an alongside berthing capacity of 3,150 m. Handling the complexities of repair work on sophisticated ships such as LNG carriers is facilitated by the yard’s well-equipped cryogenic cleanrooms. N-KOM points out that the presence of prominent maritime service providers such as Gaztransport & Technigaz (GTT), Goltens, Wärtsilä, Wilhelmsen Ships Service, Turbo Technik and Cargotec operating within the shipyard helps smooth the overall repair process, offering convenience to shipowners and managers patronising the facility. In addition to its team of GTTqualified membrane welders, N-KOM works with various specialist membrane repair contractors.

Ballast treatment

N-KOM continues to see interest in ballast water treatment system (BWTS) installations, and the yard has experience in handling such installation work for several vessels. Understandably for large LNG carriers, the choice of BWTS is relatively limited. The focus is on those systems that can meet not

LNG World Shipping | September/October 2018


36 | NAKILAT/N-KOM REPORT

The 210,000 m3, 2009-built Al Sadd, one of the 31 Q-flex size LNG carriers in the Nakilat fleet

only the ballast volume and flow requirements of the ship, but also the need to complete the necessary ballast treatment operations in line with their cargo-handling timescales. On the plus side, LNG carriers have sufficient space and power available to enable the installation of a BWTS able to meet its needs. N-KOM cautions that the engineering of the retrofit process should be carefully planned and rehearsed before drydocking. One of the challenges in this process involves optimising installation processes and the costs of manhours and materials. From interactions with ship operators, N-KOM observes that there have been delays on the part of owners in selecting the BWT systems, albeit with reasonable justifications. The maturity of the technology, equipment approvals and regulations are the main three parameters that pose serious challenges to the operators. As such, adequate planning and preparation are highly recommended to facilitate the correct choice of BWTS in a timely manner. N-KOM is able to observe the choices of shipowners to ensure compliance with the more stringent air emissions requirements coming into force, most notably the 0.5% global sulphur cap that becomes mandatory on 1 January 2020. The yard has noted that a number of owners with modern ships that still consume relatively large amounts of fuel, such as large tankers, are exploring exhaust gas scrubbers as one of the solutions. N-KOM has already been booked for scrubber retrofits for a series of very large crude carriers belonging to a major Greek tanker operator. The yard expects that the remainder of 2018 and the whole of 2019 will be a busy time in terms of scrubber retrofits.

Nakilat’s expanding outreach

It has also been a year of significant developments at Qatar Gas Transport Co Ltd (Nakilat), the Qatari shipowning and marine services partner in the N-KOM operation. Established in 2004, Nakilat remains the essential transportation link in the supply chains developed to ensure the delivery of LNG exports from Ras Laffan to markets worldwide. The company’s outreach extends to more than 90 receiving terminals across 26 countries. In March 2018 Nakilat expanded its joint venture partnership

LNG World Shipping | September/October 2018

with the Greek shipping company Maran Ventures Inc to include two additional LNG carriers, boosting the number of vessels jointly owned by Nakilat and Maran Gas from 13 to 15 vessels. Nakilat reports that strategic alliances with renowned partners have been fundamental to the company’s success. Furthermore, opportunities to grow its international presence in this manner, to capitalise on growing global energy demands, are under continuous review. In this respect, Nakilat’s pursuance of a presence in the floating storage and regasification unit (FSRU) niche market achieved success in June 2018, when a landmark agreement was signed with Excelerate Energy of the US. The establishment of a joint venture company between the two parties gave Nakilat a 55% stake in one of Excelerate’s FSRUs - the first such vessel to join the Qatari shipowner’s fleet. Nakilat states that this deal marks the beginning of its growing involvement with the FSRU sector, with the promise of further outreach to developing LNG markets. Nakilat now either fully or partly owns 65 LNG carriers, four large LPG carriers and one FSRU. NSQL, the company’s in-house ship management affiliate, now manages and operates 18 vessels, comprising the four LPG carriers, six Q-max size LNG carriers and eight Q-flex LNG carriers. Nakilat’s 70-ship fleet includes 14 Q-max and 31 Q-flex LNG carriers, the world’s largest such vessels. The cargo-carrying capacity of the Nakilat LNGC fleet totals over 9M m3, making it the world’s largest such fleet, with about 12% of the overall capacity. The fleet transports more than 60% of Qatar’s LNG exports. Qatar is reviewing a possible expansion of the LNG liquefaction capacity at Ras Laffan, from the current level of 77M tonnes per annum (mta) to 100 mta by the early 2020s. Irrespective of that decision, Nakilat will continue to extend its outreach and LNG regasification, power generation and small-scale LNG are among the areas the company will continue to explore for possible opportunities to expand its business portfolio. However, should the project to expand Ras Laffan output to 100 mta get the green light, both N-KOM and Nakilat can look forward to a significant incremental jump in business activity. LNG

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LNG CARRIER FLEET ANALYSIS | 39

LNG carrier fleet statistics add up to a success story The latest LNG carrier fleet statistics compiled by VesselsValue and Clarksons Research convey the underlying strengths of a buoyant shipping market sector

The VesselsValue fleet statistics show that the average value of a ship in the conventional-size LNGC and ice-class LNGC orderbook is US$204.5M

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A

ccording to VesselsValue, as of 1 August 2018, there were 481 large LNG carriers, not including floating storage and regasification units (FSRUs), of over 100,000 m3 in service. This fleet totalled 76.6M m3 in capacity and was valued at US$52.9Bn. There were on order another 89 such vessels with an aggregate capacity of 15.5M m3 and a value of US$18.2Bn. The cargo-carrying capacity and value of the orderbook are thus 20% and 34%, respectively, of those of the in-service fleet. Considering ship price depreciation over the years, the relatively high values of the orderbook is not surprising. In terms of ship numbers, two-thirds of the in-service LNG carrier (LNGC) fleet is between 0 and 15 years of age. VesselsValue identifies Qatar Gas Transport Co (or Nakilat), Mitsui OSK Lines, Teekay, Maran Gas Maritime and NYK Line as the top five LNGC owners. Of the large gas carrier fleet in service, the five control 110 ships with a combined capacity of 19.5M m3 and a total value of US$14.4Bn. Of the ships on order, the top five owners are involved with 37 of the newbuildings. These ships have an aggregate capacity of 6.3M m3 and are valued at US$7.8Bn. The top five LNGC owners are obviously playing a major role in the evolution of the LNGC fleet, but the nature of LNG trades, as one of the fastest growing sectors of the maritime market, leaves the door open to newcomers. The recent decisions by Minerva Maritime in Greece and Celsius Tankers in Denmark to springboard off their presence in other maritime trades and order LNG carriers for the first time highlights the attractions of this gas shipping sector. The commitment comes with the necessity of joining the relevant industry bodies and gaining access to established industry best practices to smooth their entry into a close-knit fraternity where safety, efficiency and reputation are essential to success. The VesselsValue figures highlight what is a buoyant sector. A new review by Clarksons Research, LNG Trade & Transport 2018, published in July, states that the LNG trades now cover some 11% of global gas demand, up from 6% in 2000, Furthermore, LNG movements now account for 35% of the global gas trade, up from 26% in 2000. In 2017 worldwide movements of LNG increased by 9% yearon-year, and Clarksons Research predicts a rise of 11% this year. Statistics compiled by the International Group of LNG Importers (GIIGNL) show that LNG movements by sea reached the 289.9M tonnes per annum (mta) level in 2017. Looking ahead to 2019 and beyond, further strong growth is on the cards. This conclusion is underpinned by the fact that there is currently 85 mta of new liquefaction capacity under construction, while a further 169 mta of proposed export capacity is at the frontend engineering and design (FEED) stage. The Clarksons Research study quotes some further interesting numbers that indicate the LNG trades continue to strengthen, namely that there were 275 individual country-to-country LNG trade routes in 2017, up from 168 in 2012 and 90 in 2007. At the receiving end on these trade routes, FSRU applications are increasing, with 37% of the import capacity under construction expected to utilise regas vessels. Such vessels account for only 9% of existing import terminal regasification capacity. LNG

LNG World Shipping | September/October 2018


THE GLOBAL LNG CARRIER FLEET IN SERVICE LNG CARRIER FLEET By value (USD M)

By number of vessels QMAX - US$2,331

14

QFLEX - US$4,364

31

Large LNG - US$44,582

423 15

RLNG - US$1,852

9

Midsize LNG - US$338 Small Scale LNG - US$495

20

Large LNG - US$19,107

94

ON ORDER LNG CARRIER FLEET By value (USD M)

By number of vessels

Midsize LNG - US$64

1

Small Scale LNG - US$414

10

LNG FLEET AGE PROFILE US$32k

US$24k

$25.9

140 120

US$20k

100

US$16k

80

US$12k

60

US$8k

40

US$4k

20

US$0 On Order

0 0-4

5-9

10-14

15-19 Years

20-24

25-29

30-34

35-39

40-44

No. of Vessels

Total Value USD M

US$28k

160 No. of Vessels Total Value USD M


TOP LNG OWNER NATIONS BY VALUE AND NO. OF VESSELS (IN SERVICE & ON ORDER)

GREECE US$16,828 99

JAPAN US$13,615 116

CHINA

QATAR US$8,451 60

(MAINLAND)

US$4,316 31

UK US$4,239 34

VALUE (USD M) US$4,093 37 NORWAY

US$4,023 26 BERMUDA

US$2,724 46 S. KOREA

US$2,027 29 MALAYSIA

US$1,655 14 USA

TOP 5 LNG OWNER COMPANIES BY VALUE AND NO. OF VESSELS (IN SERVICE & ON ORDER) Company

No. of Vessels

Total CBM

Total Value USD $M

MOL

36

5,574,206

US$5,733

Qatar Gas Transport Co

34

7,930,126

US$5,160

Teekay LNG Partners

26

4,039,029

US$4,023

Maran Gas Maritime

21

3,617,200

US$3,852

GasLog Ltd

18

3,007,496

US$2,933

LNG S&P HISTORY BY NO. OF VESSELS AND TOTAL SPEND 42

US$5.25

No. of Vessels Total Value USD M

Total Spent USD M

US$5k

35

US$4k

28

US$3k

21

US$2k

14

US$1k

7

US$0 2008

0 2009

2010

Source: VesselsValue on 20th August 2018

2011

2012

2013

2014

2015

2016

2017

2018

No. of Vessels

US$6k


Boris Vilkitsky is the first of the five Arc7 icebreaking LNG carriers in which Dynagas Holdings has a stake

Dynagas reaps reward of ice-class LNG play Dynagas has a private and a public side and one is feeding LNG carriers into the other, as the group’s long-term contracts to service Russian Arctic LNG exports commence

I

t is often said the barriers to entry are high in the LNG carrier business and there is no doubt that sound credentials are de rigeur. For George Procopiou, founder of Dynacom, it was his reputation and track record in other shipping sectors that convinced his banks to support him when his tanker company ordered its first LNG carrier in 2004. Furthermore, they did not hesitate to provide their backing even though he had taken the bold step of ordering ice-class vessels. Today, his shipping group has two companies in the LNG sector, Dynagas Holdings and Dynagas LNG Partners. The role of Dynagas Holdings is to provide newbuilding supervision and crewing, as well as commercial and technical management, for the group’s LNG carriers.

Ice specialist

In recent years Dynagas Holdings has been busy supervising the construction of fully winterised, icebreaking Arc7 LNG carriers built for the carriage of Yamal LNG cargoes loaded at Sabetta high in

LNG World Shipping | September/October 2018

the Russian Arctic. The company has an interest in five of the 15 such ships that Daewoo Shipbuilding & Marine Engineering in Korea is building for the project. Two of the Dynagas five have been completed and the remaining three are due for commissioning in 2019. When Dynagas LNG Partners was floated on NASDAQ in 2013, its assets comprised three existing Finnish Swedish ice class 1A (equivalent to Arc4) Dynagas Holdings LNGCs - Clean Energy, Ob River and Clean Force - a US$30M revolving credit from George Procopiou and an option to buy the ice class LNGCs Dynagas Holdings had on order. At the time Dynagas Holdings had a 58% interest in Dynagas LNG Partners, and had agreed to pay the management company, which is wholly owned by George Procopiou, US$2,500 per day (increasing annually by 3%) for each vessel, plus 1.25% gross of charter hire. In due course, seven new Dynagas Holdings LNGCs earmarked for the Yamal LNG project will be sold, with their time charter contracts, to Dynagas LNG Partners. The complement comprises the five 172,410 m3 Arc7 ships constructed by DSME and two Arc4 ships that will be utilised to shuttle cargoes transshipped from the Arc7 vessels to their final customers. This ship purchase pattern is clearly laid out in the Dynagas LNG Partners prospectus: “We will receive the right to purchase these vessels, which we refer to as the optional vessels, at a purchase

price to be determined pursuant to the terms and conditions of the omnibus agreement within 24 months of their delivery to our sponsor.” The sale value is set by an independent appraiser and the right to purchase is not an obligation. Nor does the prospectus prohibit the family from retaining the newbuildings and competing against the public company. Speaking at the Analyst & Investor Capital Link Shipping Forum, organised as part of Posidonia week in Athens in June 2018, Dynagas LNG Partners chief executive Tony Lauritzen (George Procopiou’s son-in-law), said, “It is Dynagas group policy to always have some LNG ships on order speculatively.” He noted that it was very important to arrange the right sort of contract. Some of the contracts that the Dynagas group had been offered required too low rates for too short a period. This might be tempting for those owners looking to enter the LNG business, but one had to think of the employment possibilities of a vessel at the end of five-year contract, he warned. Ultimately, Dynagas will have 11 LNGCs on charter to Novatek, operator of the Yamal LNG project. The fleet will comprise the five Arc7 icebreaking ships and six ice class Arc4 vessels. Novatek is employing the Arc4 ships for the final leg of the delivery voyages, to opimise the time the Arc7 vessels work in the Arctic high latitudes for which they were designed.

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SHIPOWNER PROFILE | 43

FSRU play

In 2016 it was rumoured that the Dynagas group had signed for two newbuilding slots with HudongZhonghua Shipbuilding in China and that engineering proposals had been drawn up for two floating storage and regasification units (FSRUs) for the slots in question. The decision to order the two FSRUs on a speculative basis was later confirmed. Previously, in 2012, the Dynagas group was reported to have cancelled a speculative FSRU order at STX Offshore.

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When asked about FSRUs at the Capital Link Forum, Mr Lauritzen was, not surprisingly, bullish. “We believe in the FSRU market. We are impressed with how the industry has been making increasing use of regas vessels. We have seen a market that has gone from being extremely long term to one where units are often being chartered in for seasonal need. We have chosen a flexible FSRU design able to accommodate this change in the regas vessels sector. Our new ships will be tailormade for use as both conventional, trading LNG carriers and FSRUs. The Hudong pair

will be built with dual-fuel, diesel-electric propulsion systems and twin skegs and will be able to sail at 19.5 knots. For regasification duties they are being provided with the ability to vaporise LNG, using either the open-loop or closed-loop technologies, or even a combination of the two.� With the speculative FSRU orders, the Procopiou shipping group is again going boldly into a new sector, albeit with the adaptability to work in the pure LNG carrier market, if need be. One thing is certain, Mr Procopiou is not afraid to take a punt on the LNG market. LNG

LNG World Shipping | September/October 2018


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LNG AS MARINE FUEL | 45

LNG fuel and the ship emissions debate The need to achieve a 50% cut in greenhouse gas emissions by 2050 has the shipping industry in a spin. LNG’s credentials as a transitional fuel are the greenest of the currently viable alternatives Of the gas-burning propulsion systems currently in service, MAN’s M-type, electronically controlled, gas-injection (ME-GI) engine yields the lowest methane slip volumes per unit of fuel

T

he alleged environmental advantages of LNG as one of the three mainstream propulsion fuel options available to shipowners have been called into question of late. University Maritime Advisory Services (UMAS), in a study published in June 2018, concluded that the European Union’s (EU) projected spending on LNG bunkering infrastructure would have no significant climate benefits. Furthermore, UMAS, a University College London consultancy division, has noted such investments could potentially increase greenhouse gas (GHG) emissions from shipping as a result of methane slip in the LNG supply chain. The EU has spent US$250M to date on projects promoting the use of LNG as transport fuel for ships, inland waterway vessels and vehicles. These monies have accounted for up to 50% of the total cost of individual schemes, usually matching the private sector’s contribution. If this level of subsidy was to be maintained over the long term, and if one of the high LNG use scenarios considered by UMAS comes to pass, the EU could be forking out up to

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US$22Bn through 2050. Such a high-use case might occur if LNG prices remain comparatively low and alternative fuels like hydrogen are unavailable. The UMAS consultants concluded that such a financial commitment would deliver, at best, only a 6% reduction in GHG emissions by 2050 compared to the replaced diesel fuel. Such a level is well below IMO’s objectives of at least a 50% cut by 2050 and the goal of zero emissions sometime during the following half century. Although it may be the cleanest-burning of the fossil fuels, LNG has some inherent drawbacks, according to UMAS. For a start, LNG only provides a 20-25% reduction in CO2 emissions compared to diesel. Secondly, the LNG supply chain, from natural gas production at the wellhead and LNG liquefaction to LNG handling, regasification and gas consumption, is prone to some degree of methane slip. Natural gas and the LNG processed for carriage by sea and use as bunker fuel is, typically, composed of 95% methane. Methane is a potent GHG due to its ability to trap radiation and hence promote

global warming. A recent US study on methane slip by the University of Delaware and the Rochester Institute of Technology for the US Maritime Administration (MARAD) found that on a volume basis, CO2 accounts for about 82% of all GHGs from human activities in that country, while methane is responsible for 9%. However, in a tonne-fortonne comparison, methane has an impact on climate change that is 25 times more adverse than CO2. Losses of methane throughout the supply chain have been put at less than 2.5%. However, although methane emissions volumes are relatively small, the escape of natural gas has a disproportionately high global warming potential (GWP) quotient. Methane slip in the context of LNGpowered ships occurs as a result of gas leaks during bunker transfers and also when a small proportion of the natural gas introduced into engine combustion chambers fails to burn and escapes through the exhaust system to the atmosphere. The methane that escapes the combustion chamber in a gas-fuelled engine as an unburned hydrocarbon stems

LNG World Shipping | September/October 2018


46 | RUNNING HEAD sub

Bunker tanks on LNG-powered Viking Grace: the roro passenger ferry was provided with a rotor sail in April 2018 to reduce greenhouse gas emissions

from the poor combustion of methane under very lean methane/air mixtures; variations in flame propagation dynamics; and “blow-by” of unburned methane during cylinder valve operations. The three most popular engines utilised by LNG-powered ships are: leanburn, spark-ignited engines operating on the Otto cycle; diesel dual-fuel (DDF) compression-ignited engines, operating like a lean-burn engine on the Otto cycle, but with Diesel cycle injection to ignite the methane/air mixture; and diesel-injected, compression-ignited engines operating with natural gas on the Diesel cycle. The first type, the lean-burn gas engines of the type manufactured by Rolls-Royce and Mitsubishi, can achieve lower downstream CO2 emissions levels than DDF engines at similar air-fuel ratios. Such engines can also operate on a much leaner fuel-air mixture and at higher compression ratios using advanced spark timing. However, such engines are more prone to methane slip than compression ignition engines DDF engines typically use a portinjected, air/methane mixture which is ignited by Diesel cycle injection and burns with the same flame propagation as in Otto cycle combustion. Such engines, including Wärtsilä’s four-stroke and Winterthur Gas & Diesel’s two-stroke units, offer lower levels of methane slip than lean-burn gas engines. In high-pressure, gas-injection Diesel cycle engines, such as MAN’s ME-GI units,

LNG World Shipping | September/October 2018

the combustion process utilises pilot fuel ignition and is diffusion-controlled, as in conventional diesel engines. Such two-stroke engines provide high levels of reliability, thermal efficiency and fuel flexibility, as well as low levels of methane slip, to the point of being negligible. However, high-pressure gas-injection engines do not result in NOx reductions sufficient to meet IMO’s upcoming Tier III requirements. Such units have to be provided with an exhaust gas recirculation (EGR) system and/or a selective catalytic reduction system to achieve the required NOx reductions. As a general rule, methane slip occurs only in the Otto cycle mode, including in dual-fuel engines, but not in the Diesel cycle mode. Methane slip tends to be greater at lower engine loads and is also dependent on the composition of the natural gas and the engine speed. All manufacturers of gas-burning engines continue to work to minimise methane slip. This is done by ongoing development of their combustion chamber technologies to improve the combustion process; using catalysts to oxidise unburned methane; and optimising turbocharging arrangements. After-treatment systems utilising catalysts for methane oxidation are acknowledged to be a technology requiring further development.

In praise of LNG

The LNG community promotes the use of gas in its liquefied form to power ships as a

clean-burning alternative to the low-sulphur marine diesel oil and heavy fuel oil plus exhaust gas scrubber options. It is the only one of these three currently viable options that fully meets the requirements of IMO’s 0.5% global sulphur cap and 0.1% sulphur emission control areas (SECAs) restrictions, without the need for ancillary equipment. CO₂ is not the only component of ship atmospheric emissions; there are also sulphur oxides (SOx), nitrogen oxides (NOx) and particulate matter (PM). LNG does well when it comes to these other components; burning natural gas results in 100% reductions in SOx and PM emissions and a cut in NOx escapes of over 90%. NOx emissions vary with the gas-burning engine type. Notwithstanding the immediate advantages offered by LNG, and the possibility of additional reductions in methane slip, Transport & Environment (T&E), the non-governmental organisation (NGO) that commissioned the UMAS report, believes that the shipping industry should reject the LNG option from the outset. “It would simply be throwing good money after bad,” declared the group, “and LNG assets could end up stranded.” T&E called on the European Commission to amend its 2014 Directive on Alternative Fuels, which contains provisions mandating LNG refuelling and bunkering facilities. Furthermore, pointed out the group, the EU should “instead back future-proof technologies that will deliver the much greater ship emissions reductions that will

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LNG AS MARINE FUEL | 47

be needed, including liquefied hydrogen infrastructure and jettyside charging of battery-powered vessels”. However, considerable advances in chemistry and technology will be needed if batteries of the size capable of powering large, oceangoing ships are to be provided. A global recharging infrastructure would be required, with access to electricity from renewable energy, along with more frequent port calls to permit recharging.

Future fuel challenges

SEA\LNG, the broad industry consortium that promotes the commercial case for LNG as marine fuel, was among the first to point out a flaw in the conclusions reached by the UMAS researchers. SEA\LNG states that, at the moment, alternative fuels such as hydrogen and ammonia are not economic, not available at the scale needed and unproven for shipping operations. These alternatives are justifiably called future fuels, as the technologies on which they rely are yet to be commercialised. Of course, the shipping industry and governments need to work at developing the necessary future emissions-free fuel technologies, but huge investments over decades will be required. For the time being, when it comes to environment-friendly alternatives to oil, LNG is the only scalable and economic fuel available for the vast majority of deepsea ocean shipping. The use of hydrogen, both with fuel cells and as a power source in its own right, has been touted. The fact that it offers zero emissions operations is a powerful draw. However, providing hydrogen in the quantities required to fuel ships, especially large vessels, poses considerable challenges. Hydrogen can be produced by electrolysing water or from reforming hydrocarbon fuels and, of these fuels, natural gas is the most appropriate feedstock. A further technology under development which bodes well for the future is power-to-gas, whereby hydrogen gas is produced from surplus renewable electricity. Production of liquefied hydrogen (LH2) in the volumes required to power ships entails high costs, due to the work needed to free it from other elements, as does the provision of the necessary supply infrastructure. LH2 is a low-density substance with a boiling point of -253˚C. To store the fuel in its cryogenic state onboard ship requires large, expensive, well-insulated tanks constructed of special materials. Hydrogen also has a wide flammability range; it burns in air concentrations in

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the range 4 to 75%. The provision of sophisticated ventilation, alarm and fire protection systems would be required to minimise the flammability risk stemming from a hydrogen leak on an LH2-powered ship. Another option is to compress hydrogen rather than liquefy it. However, the energy concentration would not be so great and it would probably be impractical to utilise compressed gaseous hydrogen on larger ships engaged in longer voyages. The provision of hydrogen for use with fuel cells also has its challenges. For large ships, fuel cells would be called upon to provide upwards of 500 kW of power, necessitating high investment costs and consideration of not only their expected lifetime, but also how the dimensions and weight of the required cells could be accommodated on the ship. MAN has stated that the adaptation of its ME-GI engine to run on hydrogen would be relatively straightforward but believes the cost of the onboard storage arrangements and ancillary systems required for LH2 would be too high. The propulsion system manufacturer has been weighing up a solution involving the conversion of hydrogen to methanol for consumption in its existing ME-LGI engines, a variant of the ME-GI unit. While methanol is a clean-burning, biodegradable liquid fuel, it is currently costlier than diesel and less efficient to burn. It is also toxic and contains about

67% of the energy of gasoline on a per litre basis.

LNG in the intermediate mix

Advocates of LNG as marine fuel have faith in the ability of gas-burning engines to ensure a smooth transition to an emissions-free future over an extended period. They also believe that investments in LNG bunkering over the next couple of decades will not be misplaced but, rather, will reap rewards. Quite aside from the immediate environmental benefits resulting from a switch to natural gas from conventional oil fuels, the shipping industry is also working to further reduce atmospheric pollution caused by gas-burning engines. Greater use of biomethane from renewable and carbonneutral biogas sources is one option. On a grander scale, the maritime industry’s commitment to IMO’s Energy Efficiency Design Index (EEDI) has already helped reduce shipping emissions from the peak levels recorded in 2008. The EEDI regime continues to be tightened and consideration is now being given to additional conditions which might be applied to new vessels delivered after Phase 3 has been implemented in 2025. As IMO, industry and maritime administrations work towards adopting acceptable and workable emissions reduction measures in the years ahead, LNG as marine fuel has a key role to play as a transitional power source. LNG

The bad old days – the International Chamber of Shipping states that the shipping industry today gives off 20% less CO2 per tonne/km than it did in 2005

LNG World Shipping | September/October 2018


LNG IN CHINA | 49

Chinese LNG import terminal construction work continues apace

T

he Chinese Government’s decision on 3 August 2018 to impose a 25% tariff on imports of US LNG, as part of the escalating, tit-fortat trade war between the two superpowers, will probably have only a minor impact on China’s surging LNG import volumes. China’s LNG imports in 2017 jumped 42.3% year-onyear, to 39.1M tonnes. The US provided only 1.4M tonnes of that total while Australia shipped 17.8M tonnes to China and Qatar 7.7M tonnes. Although US LNG exports are set to increase fivefold over the next three years, from 12.2M tonnes in 2017 to around 65M tonnes in 2020, Chinese buyers have signed up for relatively little of this growing output. Meanwhile, Novatek is ready to help meet China’s burgeoning demand for gas as it prepares to bring onstream the second and third liquefaction trains of its new Yamal LNG project in the Russian Arctic. In addition, the developers of the planned expansions of the Sakhalin 2 terminal in east Russia and the PNG LNG terminal in Papua New Guinea will be targeting Chinese buyers for much of their new LNG production.

Operators of China’s LNG import terminals are working hard to provide the infrastructure required to handle the country’s burgeoning gas purchases 2018 LNG imports totalled 23.8M tonnes, a 50% jump on the same period a year earlier. Only Japan imports more LNG than China. In early August 2018 China’s 20th LNG receiving terminal was commissioned. Known as Shenzhen Diefu LNG, the 4 mta facility is operated by China National Offshore Oil Corp (CNOOC) and is located in the Diefu district of Dapeng Bay, not far from CNOOC’s existing Dapeng LNG terminal. China’s complement of receiving terminals features 15

large-scale LNG import facilities and five small-to-mid-scale coastal distribution installations. Of the country’s 20 terminals, CNOOC operates 10, comprising nine large-scale LNG import facilities and one small-scale coastal distribution complex, the Fangchenggang distribution centre near the Vietnam border. The other CNOOC import terminals besides Shenzhen Diefu are located at Tianjin, Shanghai, Ningbo, Putian, Yuedong, Dapeng, Zhuhai and Hainan. Of the remaining six

Chinese large-scale LNG import facilities, Sinopec and PetroChina, the country’s other leading oil and gas companies, operate three each. CNOOC reports that its nine import terminals can handle up to 33.8 mta of LNG, representing 56% of China’s receiving capacity and placing the company third among the world’s leading LNG importers. Since Dapeng LNG, the country’s first import terminal, was commissioned in 2006, CNOOC has imported 120M tonnes of LNG. Dapeng has handled 50% of that traffic. CNOOC has plans to further expand its LNG terminal network, with new facilities in Fujian, Jiangsu and Zhejiang provinces planned. In May 2018 the energy company gave the green light to a project to build its 10th major import terminal, at Longhai City near Zhangzhou in Fujian province. The 3 mta facility, with three 160,000 m3 storage

CNOOC and the juggernaut The Chinese LNG imports’ juggernaut continues to roll on, as the government’s programme of substituting coal with clean-burning natural gas in residential, commercial and industrial premises continues to gain ground. China’s H1

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CNOOC’s Tianjin terminal, which started operations with a 145,000 m3 regasification vessel, is about to be provided with six 220,000 m3 shore storage tanks

LNG World Shipping | September/October 2018


50 | LNG IN CHINA

tanks, is due for completion in late 2021. Also in May 2018, CNOOC decided to augment its existing Tianjin installation in northern China by constructing six

220,000 m3 storage tanks and providing additional regasification equipment. When the project is complete in 2022, CNOOC’s Tianjin terminal will be able to process 7.25 mta of

LNG, up from an expected 3.2 mta this year. In another expansion project, announced earlier in 2018, CNOOC was given clearance to press ahead with

constructing two new 200,000 m3 storage tanks and additional road tanker loading bays at its Shanghai terminal. The opportunity was grabbed and the company gave the green light to a scheme that will double the facility’s throughput capacity, from 3 to 6 mta, by 2020.

Sinopec’s solid base Sinopec’s most well-known LNG sales and purchase contact is with Australia Pacific LNG (APLNG) for 7.6 mta for 20 years from the latter’s liquefaction plant in the Australian east coast port of Gladstone. Sinopec has also signed up for 2 mta of LNG for 20 years from the PNG LNG terminal in Port Moresby on Papua New Guinea’s southern coast. The APLNG and PNG LNG volumes dominate the cargo flows into the Sinopec import terminals at Qingdao, Tianjin and Beihai, all of which have a 3 mta LNG reception capacity. The Qingdao facility opened in December 2014, Beihai in April 2016 and Tianjin in February 2018. The Sinopec purchases of APLNG cargoes are a mix of free-on-board (FOB) and delivered-ex-ship consignments. To cover the FOB shipments, Sinopec, in tandem with Mitsui OSK Lines and China COSCO Shipping, has had a series of six 174,000 m3 LNG carriers built at the Hudong-Zhonghua yard in China. The last of the sextet, Cesi Lianyungang, was commissioned in May 2018. In August 2018 Sinopec received approval to proceed with its planned expansion of the Qingdao terminal. The US$335M expansion project, which will involve constructing two 160,000 m3 storage tanks, will boost the facility’s throughput capacity from 3 to 7 mta. Construction work on a

LNG World Shipping | September/October 2018

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LNG IN CHINA | 51

fourth Sinopec import terminal, the 3 mta Wenzhou facility in Zhejiang province, has been approved and a late 2021 start to operations is planned. With Wenzhou, and expansions of all three of its three existing terminals in the offing, Sinopec is gearing up for a significant increase in its LNG import capacity, from 9 mta currently to 26 mta by 2023.

PetroChina expansions PetroChina is similarly engaged in projects to boost its LNG receiving capacity, including with expansion work at its Rudong, Tangshan and Dalian import terminals. Affiliate company Kunlun Energy manages PetroChina’s LNG import facilities. When a new 200,000 m3 storage tank and additional regasification facilities were commissioned at Rudong in November 2016, LNG throughput capacity was C increased from 3.5 to 6.5 mta. M Rudong received 57 shipments and 4.4M tonnes of LNG in Y 2017. Dalian has similarly CM had its import capacity increased, from 3 to 6 mta, MY by constructing additional facilities, including a new CY storage tank. CMY The Tangshan installation, K a main provider of gas for Beijing, is also being expanded. Four new 160,000 m3 storage tanks are currently being constructed, which will double storage capacity at the terminal to 1.28M m3 by the end of 2019. PetroChina reports that LNG throughput in 2017 at Tangshan, Rudong and Dalian was 95% ahead of the previous year’s figure. In March 2018 Dalian announced it had received 10M tonnes of LNG since opening in November 2011. PetroChina is also weighing up the feasibility of constructing eight additional

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LNG import terminals by building up purchases of the 2030, in Shandong, Liaoning, new US LNG export volumes Guangdong and Fujian about to come onstream. provinces. An initial spur for While the new 25% additional import capacity import tariffs on US LNG 1 2018/07/02 13:18:34 was 3_LNG_W124xH190_EN.pdf the possibility of imports might decrease

the attractiveness of such purchases, closer links between US gas sellers and Chinese gas buyers might help overcome the trade imbroglio the two countries are sinking into. LNG

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LNG World Shipping | September/October 2018


The Enterprise Products Partners terminal on the Houston Ship Channel is the world's busiest LPG loading facility

Very large gas carriers in the global LPG spotlight The fast-growing VLGC fleet is moving back into balance as the global trade in LPG, driven by US exports and Chinese imports, is growing once again

T

he depressed 2017 freight market for very large gas carriers (VLGCs) that persisted into the Q1 2018 is now showing signs of lifting. As of late July, increased cargo liftings in the US Gulf and at the terminals of the major Middle East exporters helped underpin a rise in spot rates to around US$25,000 per day for the benchmark Middle East-to-Japan route. That figure is on average double what owners of these fully refrigerated LPG carriers of 75,000-85,000 m3 were able to command during 2017. It is also 60% ahead of the returns posted in Q1 2018. Reduced demand for LPG in Japan, India and South East Asia, as well as a poor price spread for the product between the Atlantic and Pacific Basins, served to dampen shipping returns last year. The significant

LNG World Shipping | September/October 2018

number of newbuilding deliveries in 2017 added to the VLGC fleet oversupply and helped prolong the depressed market.

Rebound in LPG demand

But the Asian demand for LPG, including for use as a petrochemical feedstock, is on the rise once again and the current, more sedate pace of VLGC completions bodes well for a better fleet supply/ demand balance and a continued climb in freight returns. Shipowner contentment rises and falls in line with the extent to which spot rates go above or below the current acknowledged VLGC breakeven point of about US$21,000 per day. Shipping market volatility has been difficult to avoid for the VLGC fleet in recent years, such has been the meteoric

rise of the sector. It has been difficult to keep the fleet in balance during an era that has witnessed burgeoning LPG production volumes in the US Gulf, on the back of the shale gas phenomenon in that country, and an equally sharp rise in demand for LPG feedstock from China’s newly built propylene-producing propane dehydrogenation (PDH) plants. As VLGC spot rates breached the sixfigure mark in 2015, an unprecedented number of new ships were ordered. At the start of 2015 there were about 150 VLGCs in service. That fleet is on the verge of doubling. Figures compiled by VesselsValue show there are currently 263 VLGCs in service and 39 on order. Three of the ships on order are due for completion over the rest of this year,

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VLGC FLEET | 53

Heat map showing primary VLGC discharge locations worldwide (source: VesselsValue)

22 in 2019 and 14 in 2020. In 2020, when the ships currently under construction are completed, the VLGC fleet will stand at 302 vessels. Although VLGCs will account for only 20% of the global fleet of LPG and chemical gas carriers in terms of ship numbers, this sector will cover twothirds of the fleet’s cargo-carrying capacity in 2020. The output of US shale gas, and downstream products such as LNG, LPG and ethane, remains on an upward curve. The May 2018 forecast by the US Energy Information Administration (EIA) has the country down for an increase in net LPG exports to 29.3M tonnes in 2018, implying a year-on-year growth of 8.0%. EIA goes on to predict a 16.5% rise in net US LPG exports in 2019, to 34M tonnes; the majority of this cargo will be carried in VLGCs. Interestingly, two new Australian LNG export projects are poised to add 2M tonnes per annum (mta) to global seaborne movements of LPG. The Prelude floating LNG production (FLNG) vessel off the coast of Western Australia and the Ichthys LNG terminal in Darwin are both due onstream in the coming months and both will produce LPG and condensate, as well as LNG from their respective gas fields. Despite these projects, and others in Canada and Angola, US exports are set to drive the expansion in the seaborne trade of LPG in the years ahead. Almost 40% of US LPG production is directed at the export market and the inability of domestic consumers to absorb much more product ensures a healthy level of exports. On a tonnage basis, US loadings are

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expected to account for 33% of worldwide exports by 2020 and over 38% by 2025.

Fleet consolidation

Although there has been some consolidation among the fleets of the leading VLGC owners in recent years, the rapid increase in global seaborne movements of LPG has attracted numerous new players. Drewry reports that at the end of 2017 there were 62 shipowners involved in the VLGC sector, 17% more than at the end of 2013. The most notable VLGC consolidations of recent years have been the acquisitions by BW LPG of Maersk Tankers, with its 10 ships, in 2013 and Aurora Tankers, with nine VLGCs, in 2016. Elsewhere, Dorian LPG purchased 11 VLGCs from Scorpio Tankers in 2013.

These deals could pale into insignificance, however, if a BW Gas proposal to merge its fleet with that of Dorian, unveiled in May 2018, is finalised. BW controls a fleet of 48 VLGCs, including two newbuildings, and three large gas carriers (LGCs), with a total fleet capacity of 4.2M m3 and an average age of 8.2 years. Dorian owns 22 VLGCs totalling 1.8M m3, with an average age of 3.9 years. If a deal was to go through, the combined BW/Dorian gas carrier fleet would have 70 VLGCs as its centrepiece. The fleet, offering a total of 6M m3 in cargo-carrying capacity, would have an average age of 6.9 years. BW Gas stepped up its offer over the summer months and, at press time, Dorian was still weighing up the latest proposal. The combined operation, if it comes to pass, would control about one-quarter of the global VLGC fleet. BW Gas maintains that the intention of the merger is not to create an operation powerful enough to drive prices during negotiations with the customer; rather, it states its intention is to reduce costs via synergies with a merged fleet and to establish an entity that will be more attractive to financial backers. “As a larger fleet, we would operate more efficiently, with increased vessel utilisation and more efficient deployment across geographies,” said BW LPG’s chief executive officer, Martin Ackermann. “By combining our fleets, we would have enhanced scheduling capabilities, better triangulation and reduced ballast legs, all benefiting customers and shareholders.” LNG

Heat map showing primary VLGC loading locations worldwide (source: VesselsValue)

LNG World Shipping | September/October 2018


THE GLOBAL LPG

& CHEMICAL GAS CARRIER FLEET LPG CARRIER FLEET IN SERVICE By value (USD M)

By number of vessels

VLGC - US$12,595 263 VLEC - US$629 6 LEG - US$3,282 163 LGC - US$826 23 MGC - US$2,737 120 Semi Pressurised LPG - US$2,459 169 Fully Pressurised - US$3,316 690

LPG CARRIER FLEET ON ORDER By value (USD M)

By number of vessels VLGC - US$2,607 39 VLEC - US$304 4 LEG - US$696 14 MGC - US$265 7 Fully Pressurised - US$190 21

LPG FLEET AGE PROFILE $13.7

360 No. of Vessels Total Value USD M

Total Value USD M

US$16k US$14k

320 280

US$12k

240

US$10k

200

US$8k

160

US$6k

120

US$4k

80

US$2k

40

US$0 On Order

0 0-4

5-9

10-14

15-19 Years

20-24

25-29

30-34

35-39

40+

No. of Vessels

US$18k


TOP LPG OWNER NATIONS BY VALUE AND NO. OF VESSELS

SINGAPORE US$3.48 127

JAPAN US$2.99 227

GREECE US$2.83 137

CHINA (MAINLAND) US$1.85 120

NORWAY US$2.05 55

VALUE (USD BN) US$1.53 48 UK

US$1.60 36 BERMUDA

US$1.30 22 MARSHALL ISLANDS

US$1.12 58 GERMANY

US$1.20 79 S. KOREA

TOP 5 LPG OWNER COMPANIES BY VALUE AND NO. OF VESSELS Ship Type

No. of Vessels

Total CBM

Total Value US $BN

BW Group

41

3,328,296

US$2.03

Petredec Ltd

31

1,651,361

US$1.54

Dorian LPG

21

1,758,783

US$1.30

Navigator Gas

38

899,553

US$1.28

Solvang ASA

23

1,226,404

US$0.92

LPG S&P HISTORY BY NO. OF VESSELS AND TOTAL SPEND 90

$2.03

US$2.5

No. of Vessels Total Value USD BN

70 60

US$1.5

50 40

US$1.0

30 20

US$0.5

10 US$0

0 2008

2009

2010

Source: VesselsValue on 2nd August 2018

2011

2012

2013

2014

2015

2016

2017

2018

No. of Vessels

Total Spent USD BN

US$2.0

80


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SHIPOWNER PROFILE & ETHANE TRANSPORT | 57

Navigator Gas stays ahead of efficiency and environment curves Navigator Gas is engaged in a series of projects to enhance the efficiency and environmental performance of its fleet of large ethylene and ethane carriers

The ethylene gas cooler allows warm cargo to be cooled on loading

N

avigator Gas operates globally in the LPG, petrochemical gas and ammonia trades with a fleet of 38 semi-pressurised/fully refrigerated (semi-ref) gas carriers. Active in both the spot and time charter sectors, the fleet’s time is about evenly split between the two. The company has recently added the transport of ethane to its strong presence in the ethylene trades. While ethylene is a key building block in the manufacture of petrochemicals, ethane is an optimum feedstock in the production of ethylene. The surging output of shale gas in the US is rich in ethane. Navigator Gas brought economies of scale to ethylene transport 20 years ago when it introduced the largest semi-ref gas carriers ever built. The company’s recently introduced ethane carriers are, similarly, amongst today’s largest semi-ref ships. One of the company’s ethane-capable ships, the 35,000 m3 Navigator Aurora, has recently had its dual-fuel main engine converted to enable the burning of ethane (see accompanying article). The vessel is fixed on a long-term time charter to Borealis for the carriage of ethane from the Mariner East terminal near Philadelphia on the US East Coast to the chemical company’s ethylene cracker at Stenungsund in Sweden for use as a feedstock. Based in London, the Navigator Gas commercial team is headed by Oeyvind Lindeman as chief commercial officer, while chartering manager James Parrett leads a team of four charterers.

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Navigator Gas also works with selected brokers and directly with buyers, suppliers and trading houses, chartering in tonnage as and when required. Technical management of the Navigator fleet has traditionally been undertaken by carefully selected ship management companies and the ship operator has enjoyed long-term relationships with both Northern Marine Management (NMM) in Glasgow and Thome Shipmanagement in Singapore. The overall goal, however, has always been to bring technical and crew management in-house. In 2016 Navigator Galaxy became the first vessel to be managed in-house, switching from NMM to Navigator Gas Shipmanagement, headed by Paul Flaherty, the company’s fleet and technical director. The programme to internalise ship management has been rolled out across the fleet over the past two years and Navigator Gas Shipmanagement currently manages 10 of the fleet’s 38 vessels in-house. The process will be continued over the next two-to-three years, until company management is responsible for the bulk of the fleet.

Ethylene gas cooler

A recent Navigator Gas innovation is the ethylene gas cooler, a technology which allows ethylene-capable vessels to chill the cargo before it enters the cargo tanks. The concept enables more relatively warm cargo to be loaded at a higher rate. Navigator Gas has also fitted purge condensers to many vessels. Purge condensers allow cargo vapour to be recovered from the stream of incondensable gases, including nitrogen, vented from cargo tanks. Invariably, a quantity of cargo is carried along with the vented gases and the purge condenser is able to reliquefy the cargo element and redirect it back to the cargo tanks. Cargo emissions and losses are reduced as a result. The main engines on the company’s G-class gas carriers have been modified to embrace “eco-nozzles”. These devices improve ignition quality, reducing fuel consumption, emissions and maintenance loads as a result. The company has also invested in the Hans Jensen lubrication systems on its Planet and Zodiac-class vessels. This kit significantly reduces the quantity of cylinder lubricating oil used. Navigator Gas reports that the technology pays for itself in around two years on the ships provided with such systems. Navigator Gas has taken steps to be compliant with the ballast water management regulations and has fitted two different ultraviolet-type treatment systems on its ships, from Alfa Laval and Trojan. This is a rolling programme and 20 retrofits are planned

LNG World Shipping | September/October 2018


58 | SHIPOWNER PROFILE & ETHANE TRANSPORT

over the next three years. However, future selections of ballast water treatment equipment will also be determined by what systems have been fully approved by the US Coast Guard. This is a critical factor as most Navigator Gas vessels load cargoes at US ports. Although no Navigator Gas ship has been fitted with an exhaust gas scrubber as yet, the company does not rule out the possibility. Navigator Gas takes the long-term view on the 0.5% global sulphur cap that will be introduced in January 2020. The aim is to specify gasburning engines for all newbuildings, and there is also the possibility of converting existing ships to enable them to burn ethane. In addition to the immediate task of transporting ethylene and

ethane, Navigator Gas is moving up the logistics supply chain and expanding its terminal operations. The Navigator Enterprise partnership, a 50/50 joint venture with Enterprise Products Partners (EPP), is building a 1 million tonnes per annum (mta) ethylene export terminal on the Houston Ship Channel in Texas. The facility, which will comprise a chiller train, a 30,000-tonne storage tank and a dedicated marine jetty, will be able to load vessels with fully refrigerated ethylene at 1,000 tonnes per hour for shipment to Europe and Asia. The new Navigator Enterprise terminal is due for completion in late 2019. According to Navigator Gas, the company is currently investigating the possibility of developing similar terminal projects.

Achieving sulphur cap goal with ethane fuel Navigator Gas has successfully converted the LNG-burning, dual-fuel main engine on its 35,000 m3 ethylene/ethane/ LPG carrier Navigator Aurora to run on ethane. Carried out while the ship was berthed alongside at Frederikshavn in Denmark, the project was undertaken in tandem with, amongst others, charterer Borealis, engine manufacturer MAN Energy Solutions and gas carrier cargo system supplier TGE Marine. Navigator Gas and Borealis took the decision to convert the 2016-built vessel’s main engine after a successful ethane fuel trial on the MAN test bed engine at Kawasaki in Japan in July 2017. The parties agreed that if it was possible to utilise cargo carried by the

vessel cargo as a fuel source, the initiative would enable them to comply with the new 0.5% global sulphur cap to be introduced in January 2020 utilising a guaranteed supply of cost-effective fuel that meets the required emission reduction requirements. As a result of the conversion, Navigator Aurora’s MAN B&W 6S50 ME-C8.2-GI dual-fuel main engine, with its ability to run on natural gas, has now been recategorised as a 6S50ME-C-GIE ethaneburning, dual-fuel engine. Following the conversion, Paul Flaherty, director of fleet and technical operations at Navigator Gas, stated, “This project represents a significant investment by both Navigator Gas and Borealis

and clearly demonstrates a strong commitment to environmental protection and the reduction of greenhouse gas emissions. The retrofit modification complies with all current and expected global emissions requirements.” The project involved two key stages. The first required parent engine testing at Kawasaki to prove that burning ethane in the MAN gas-injection (GI) engine was possible. The trials were successful and showed that suitable, clean-burning power was available at a fuel gas injection pressure of just over 300 bar. The second stage involved the detailed planning of the modifications across several different equipment suppliers, as

well as obtaining approvals from the vessel’s class society and its Liberian flag administration. Once these hurdles were cleared, the conversion work was carried out over a period of 15 days and was completed on 20 July 2018. On the occasion Navigator Gas fleet manager Mark Macey said, “The success of the ME-GIE conversion project is the culmination of four years of close co-operation between Navigator Gas, Borealis, ABS, ABS Consulting, TGE, MAN Energy Solutions, Northern Marine and the Liberian administration. The contributions of all parties concerned resulted in the successful completion of this historic conversion to an ethane-burning engine.” LNG

Deck-mounted ethane fuel tanks on Navigator Aurora

LNG World Shipping | September/October 2018

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60 | STATISTICS - FLEET DEVELOPMENT

Flex Endeavour is one of four 174,000 m3 LNG carriers delivered to Flex LNG during the first seven months of 2018

Orders top deliveries in busy year for LNG shipyards In the year-to-date, as of 20 August, a total of 38 LNG vessels had been completed. This delivery blitz was topped by the placing of 43 newbuilding contracts

L

NG World Shipping’s latest LNG carrier orderbook statistics cover the situation as of 20 August 2018 and incorporate the changes that have occurred in the 51 days since the last orderbook was tabulated on 30 June 2018. What a dramatic seven weeks it has been for the LNG carrier fleet. The summer might be a quieter time for many industrial and commercial businesses, but activity among the LNG carrier (LNGC) shipyards has been at fever pitch; eight newbuildings were commissioned and 16 new ships contracted in that seven-week window.

Big year for deliveries

This latest part of the summer season has only added to what was already a particularly busy year for the LNGC yards. The latest eight deliveries bring to 38 the number of LNGC completions so far in 2018, comprising 34 conventional LNGCs, one floating storage and regasification unit (FSRU) and two small coastal carriers. Of this year’s conventional LNGCs completed by 20 August, Korean yards built 22, the Japanese eight and China 4. Daewoo Shipbuilding & Marine Engineering (DSME) topped the standings among individual shipbuilders, with 11 completions, while Samsung Heavy Industries (SHI) commissioned seven and Hyundai Heavy Industries (HHI), Mitsubishi Heavy Industries (MHI) and HudongZhonghua handed over four each. Only five of this year’s deliveries to date entered service with short-term and spot trading looming. Nine of the completions were

LNG World Shipping | September/October 2018

earmarked for the lifting of US export cargoes under long-term arrangements and another seven were destined for similar work on new Australian projects. Another 12 entered charters with major gas companies, to be apportioned among their global LNG supply portfolios as required. The 16 ships ordered in the seven weeks to 20 August have lifted to 43 the number of LNGCs contracted so far in 2018. The complement comprises 39 conventional LNGCs, one FSRU and three LNG bunker vessels (LNGBVs). DSME has been the principal winner of this year’s LNG order influx, with 12 newbuilding contracts secured, but the three other principal Korean shipyards active in the sector have also done well. SHI and HHI have each won nine orders to date, while Hyundai Samho Heavy Industries (HSHI), a sister yard to HHI, has finalised contracts to build eight LNGCs. Greece’s independent shipowners have continued to strengthen their presence in the LNG sector, with 20 of the 43 LNGCs ordered in the year-to-date for the accounts of Greek owners. This includes Minerva Marine and Capital Gas Carrier, two established shipping companies now making their first forays into the LNG sector.

Two-strokes in focus

The emergence of two-stroke, low-speed engines as the favoured propulsion system for new LNGCs has been strengthened with this

www.lngworldshipping.com


STATISTICS - FLEET DEVELOPMENT | 61

Elcano’s Castillo de Caldedas was readied for service earlier this year at an Imabari fitting-out berth

year’s newbuilding orders. While a four-stroke, dual-fuel dieselelectric (DFDE) system has been chosen for the newly contracted FSRU, and the propulsion system for four of the new ships is yet to be confirmed, two-stroke engines are to be fitted on 38 of the 43 ships ordered in the year-to-date. Shipowners have a choice when specifying a two-stroke dualfuel propulsion system, between MAN Energy Solutions’ M-type, electronically controlled, gas-injection (ME-GI) units and Winterthur Gas & Diesel’s Generation X Dual-Fuel (X-DF) engines. Of the two, ME-GI engines, with gas supplied to the combustion chamber at high pressure, made the early running, following an inaugural order for the propulsion system for two of its ships by Teekay in December 2012. However, the X-DF option, which relies on a much lower gas supply pressure, quickly gained ground on entering the market. Through 2017 the two engine suppliers split the LNGC newbuilding orders between themselves on a fairly equal basis, but 2018 is revealing a new pattern. Of the 38 ships with two-stroke engines ordered in the year-to-date, 24 will have WinGD X-DF engines and 14 will be powered by the MAN ME-GI option. This split has some correlation with the yard awarded the newbuilding contract. DSME has achieved considerable success in its LNGC newbuilding programme of recent years with a combination of ME-GI engines, in tandem with its proprietary partial reliquefaction and fuel gas supply systems. In contrast, the competing Korean yards of SHI, HHI and HSHI have tended to favour the X-DF option and encourage owners considering newbuilding contracts to give the technology a detailed assessment. Both ME-GI and X-DF engines have their advantages and disadvantages, but there is not much difference between them in terms of propulsive and fuel efficiencies. The technologies are still relatively new and industry debates on the merits of one technology over the other have so far proved inconclusive.

LNGC orderbook, as of 20 August 2018, stood at 129 vessels, comprising 96 conventional LNG carriers, 11 FSRUs, 10 icebreaking LNG carriers, one floating storage unit (FSU), seven LNGBVs and four small-to-mid-scale LNGCs. In addition, there are two non-propelled floating LNG production (FLNG) vessels; both are under construction at SHI and set for employment off the coasts of Malaysia and Mozambique, on behalf of Petronas and Eni, respectively. They are destined to remain on station over the lives of their respective contracts. Korean shipyards are down to construct 93 ships in the 129-vessel orderbook, or 72% of the total. Shipbuilders in Japan will contribute 20 ships (16%) and those in China 16 ships (12%). Of the individual yards, DSME has the largest backlog, with 43 vessels on its books. Next in line come HHI, with 20 ships, SHI 19, HSHI 10, Hudong eight, Kawasaki Heavy Industries (KHI) seven and MHI six. One quarter of HHI’s orderbook is comprised of FSRUs; the yard will build five of the 11 regas vessels on order. DSME, SHI and Hudong will be contributing two each. If all the ship handovers for the remainder of the year go according to schedule, the LNGC fleet will increase by 25 ships come 31 December 2018. That will make this year the busiest ever for LNGC deliveries; an annual tally of 63 completions is the equivalent of a shipyard delivery ceremony every 140 hours. The forward delivery timetable shows that 2019 and 2020 will also be busy years for LNGC commissioning ceremonies, although nowhere near this year’s levels. A total of 43 LNGCs are due to be delivered in 2019 and 45 in 2020. It is now past the point where a shipowner contracting an LNGC can be assured of a 2020 delivery slot and 2021 is now being quoted as the earliest possible completion date. A total of 13 of the recently ordered ships are booked for commissioning in the early months of 2021. There is also a trio of 178,000 m3 newbuildings on the books at Imabari for a 2022 delivery, but the owner is unspecified and there are doubts that these ships will ever be constructed. LNG

Total orderbook

The totals of LNGC deliveries and newbulding contracts for 2018 to date show a small net gain in the overall orderbook. The total

www.lngworldshipping.com

Wärtsilä has a contract to assist in the servicing of the WinGD X-DF engines set to power a growing proportion of the LNGC fleet

LNG World Shipping | September/October 2018


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STATISTICS - LNGCs ON ORDER | 63

LNG CARRIERS ON ORDER LNGC ORDERBOOK AS OF 20 AUGUST 2018 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

2468

Maran Gas

174,000

2020

GTT No96

DNV GL

DFDE

FSRU; open

Maran Gas

174,000

2020

GTT No96

LSDF (HP)

open

Maran Gas

174,000

2021

GTT No96

LSDF (HP)

open

2416

Teekay

173,400

2017

Shell

GTT No96

DNV GL

LSDF (HP)

Shell business

2417

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

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

2488

BW Group

174,000

2019

GTT No96

DNV GL

LSDF (HP)

FSRU; open

2489

BW Group

174,000

2019

GTT No96

DNV GL

LSDF (HP)

open

2464

Chandris/K Line

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

2470

Flex LNG

173,400

2019

GTT No96

ABS

LSDF (HP)

open

2471

Flex LNG

173,400

2019

GTT No96

ABS

LSDF (HP)

open

2479

Flex LNG

174,000

2020

GTT No96

LSDF (HP)

open

2480

Flex LNG

174,000

2020

GTT No96

LSDF (HP)

open

2490

BW Group

174,000

2020

GTT No96

LSDF (HP)

open

2491

BW Group

174,000

2020

GTT No96

LSDF (HP)

open

2480

Flex LNG

174,000

2020

GTT No96

LSDF (HP)

open

2490

BW Group

174,000

2020

GTT No96

LSDF (HP)

open

2491

BW Group

174,000

2020

GTT No96

LSDF (HP)

open

2483

Alpha Shipping

173,400

2020

GTT No96

LSDF (HP)

open

2484

Alpha Shipping

173,400

2020

GTT No96

LSDF (HP)

open

2485

Alpha Shipping

173,400

2021

GTT No96

LSDF (HP)

open

Minerva Marine

174,000

2021

GTT No96

LSDF (HP)

open

Minerva Marine

174,000

2021

GTT No96

LSDF (HP)

open

Seatankers

174,000

2020

GTT No96

LSDF (HP)

open

2492

www.lngworldshipping.com

LNG World Shipping | September/October 2018


64 | STATISTICS - LNGCs ON ORDER

YOUR PARTNER IN SHIP PERFORMANCE MONITORING www.kyma.no

Samsung Heavy Industries (SHI), Geoje 2189

Golar Power

170,000

2018

Golar Power

GTT MkIII

DNV GL

DFDE

Sergipe FSRU

2131

GasLog

174,000

2018

Shell

GTT MkIII

ABS

LSDF (LP)

Shell business

2212

GasLog

180,000

2019

Centrica

GTT MkV

ABS

LSDF (LP)

Sabine Pass exports

2213

GasLog

180,000

2019

GTT MkV

LSDF (LP)

open

Petronas

180,000

2020

Petronas

GTT MkIII

N/A

LNG FPSO

2149

MOL/Mitsui & Co

174,000

2018

Mitsui & Co

GTT MkIII

ABS

LSDF (LP)

Cameron exports

2150

MOL/Mitsui & Co

174,000

2018

Mitsui & Co

GTT MkIII

ABS

LSDF (LP)

Cameron 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/

2255

Pertamina consortium

170,000

2019

Pertamina

GTT MkIII

DFDE

Indonesia FSRU

2274

GasLog

180,000

2020

GTT MkIII

ABS

LSDF (LP)

open

2275

GasLog

180,000

2020

Centrica

GTT MkIII

ABS

LSDF (LP)

Centrica business

2271

TMS Cardiff Gas

174,000

2020

GTT MkIII

LSDF (LP)

open

2272

TMS Cardiff Gas

174,000

2020

GTT MkIII

LSDF (LP)

open

2276

TMS Cardiff Gas

174,000

2020

GTT MkIII

LSDF (LP)

open

2297

Celsius Tankers

180,000

2021

GTT MkIII

LSDF (LP)

open

2298

Celsius Tankers

180,000

2021

GTT MkIII

LSDF (LP)

open

2300

GasLog

174,000

2020

Cheniere Energy

GTT MkIII

LSDF (LP)

Cheniere exports

2301

GasLog

174,000

2020

Cheniere Energy

GTT MkIII

LSDF (LP)

Cheniere exports

bunkering

Hyundai Heavy Industries (HHI), Ulsan 2909

Höegh LNG

170,000

2018

Global Energy

GTT MkIII

DNV GL

DFDE

Pakistan FSRU

2854

Gazprom

174,000

2018

Gazprom

GTT MkIII

RS

DFDE

Kaliningrad FSRU

2937

SK Shipping

180,000

2019

SK E&S

GTT MkIII

ABS

LSDF (LP)

Freeport exports

2938

SK Shipping

180,000

2019

SK E&S

GTT MkIII

ABS

LSDF (LP)

Freeport exports

2945

Kolin/Kalyon

170,000

2019

Kolin/Kalyon

GTT MkIII

BV

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

3086

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

BV

LSDF (LP)

Total business

3021

TMS Cardiff Gas

174,000

2020

Cheniere Energy

GTT MkIII

LSDF (LP)

Cheniere exports

3022

TMS Cardiff Gas

174,000

2020

GTT MkIII

LSDF (LP)

open

3037

TMS Cardiff Gas

174,000

2021

GTT MkIII

LSDF (LP)

open

3095

Turkiye Petroleum

180,000

2020

Botas

GTT MkIII

DFDE

Turkey FSRU

3096

Thenamaris

180,000

2020

GTT MkIII

LSDF (LP)

open

Sovcomflot

174,000

2020

Total

GTT MkIII

LSDF (LP)

Total business

Capital Gas Carrier

174,000

2020

GTT MkIII

LSDF (LP)

open

Capital Gas Carrier

174,000

2020

GTT MkIII

LSDF (LP)

open

Capital Gas Carrier

174,000

2021

GTT MkIII

LSDF (LP)

open

Capital Gas Carrier

174,000

2021

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

S970

Unknown

174,000

2020

GTT MkIII

LSDF (LP)

open

8006

Sovcomflot

174,000

2020

GTT MkIII

BV

LSDF (LP)

open

8007

Sovcomflot

174,000

2020

GTT MkIII

BV

LSDF (LP)

open

8011

Flex LNG

174,000

2020

GTT MkIII

LSDF (LP)

open

8012

Flex LNG

174,000

2021

GTT MkIII

LSDF (LP)

open

8013

Flex LNG

174,000

2021

GTT MkIII

LSDF (LP)

open

8029

NYK Line

174,000

2020

EDF

GTT MkIII

BV

LSDF (LP)

EDF business

7,500

2018

Nauticor/SGD

Type C

LR

DFDE

Baltic bunker vessel

Hyundai Mipo Dockyard, Ulsan –

Bernhard Schulte

LNG World Shipping | September/October 2018

www.lngworldshipping.com


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66 | STATISTICS - LNGCs ON ORDER

YOUR PARTNER IN SHIP PERFORMANCE MONITORING www.kyma.no

JAPAN Mitsubishi Heavy Industries (MHI), Nagasaki 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

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

Kawasaki Heavy Industries (KHI), Sakaide 1713

K Line

164,700

2018

Chubu Electric

Moss

ClassNK

UST

Chubu Electric use

1720

MOL

164,700

2018

Chubu Electric

Moss

ClassNK

UST

Chubu Electric use

1728

MOL

155,000

2018

Mitsui & Co

Moss

ClassNK

DFDE

Cameron exports

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

CLS Japan Corp

3,500

2020

CLMF Japan Corp

Type C

ClassNK

Japan LNGBV

Imabari Shipbuilding, Imabari 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

Japan Marine United, Kumamoto 5070

MOL/Tokyo LNG Tanker

165,000

2018

Tokyo Gas

SPB

ClassNK

DFDE

Cove Point exports

5071

NYK/Tokyo LNG Tanker

165,000

2018

Tokyo Gas

SPB

ClassNK

DFDE

Cove Point exports

5072

MOL/Tokyo LNG Tanker

165,000

2019

Tokyo Gas

SPB

ClassNK

DFDE

Cove Point exports

5073

MOL/Tokyo LNG Tanker

165,000

2019

Tokyo Gas

SPB

ClassNK

DFDE

Cove Point exports

CHINA Hudong-Zhonghua Shipbuilding, Shanghai 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

1786A

Dynagas

174,000

2020

TBC

GTT No96

DFDE

FSRU; open

1787A

Dynagas

174,000

2021

TBC

GTT No96

DFDE

FSRU; open

1817A

Total/MOL

18,600

2020

Total

GTT MkIII

BV

TBC

Rotterdam bunkering

Jiangnan Shipyard, Shanghai –

Jovo Group

80,000

2021

Jovo Group

TBC

CCS

TBC

Jovo imports

Jovo Group

80,000

2021

Jovo Group

TBC

CCS

TBC

Jovo imports

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

Cosco Dalian Shipyard, Dalian N588

Dalian Inteh

Wison Offshore & Marine, Nantong –

VGS

China Merchant Heavy Industry, Nantong 188

Landmark Capital

Shipping Keppel Singmarine, Nantong –

Stolt-Nielsen

7,500

2019

TBC

Type C

DFDE

Coastal Europe

Stolt-Nielsen

7,500

2019

TBC

Type C

DFDE

Coastal Europe

Keppel/Shell

7,500

2020

Shell

Type C

DFDE

Singapore bunkering

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 20 August 2018

LNG World Shipping | September/October 2018

www.lngworldshipping.com


STATISTICS - LNGCs ON DEMAND | 67

YOUR PARTNER IN SHIP PERFORMANCE MONITORING www.kyma.no

LNG CARRIER NEWBUILDINGS DELIVERED 1 JUNE 2017 - 20 AUGUST 2018 Vessel name

Delivery

Capacity, m3

Owner

Builder

Charterer

Containment

Details

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/CLNG

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

SK Resolute

1.2018

180,000

SK Shipping/Marubeni

Samsung

Total

GTTMkIII

Sabine Pass exports

Patris

1.2018

174,000

Chandris/K Line

Daewoo

BP

GTTNo96

BP business

Cesi Wenzhou

1.2018

174,000

CESI/MOL

Hudong

Sinopec

GTTNo96

APLNG exports

Pan Americas

1.2018

174,000

CNOOC/CLNG/TK

Hudong

Shell

GTTNo96

QCLNG exports

Gaslog Houston

1.2018

174,000

GasLog

Hyundai

Shell

GTTMkIII

Shell business

Flex Endeavour

1.2018

173,400

Flex LNG

Daewoo

Uniper

GTTNo96

Uniper business

Flex Enterprise

1.2018

173,400

Flex LNG

Daewoo

Voyage charters

GTTNo96

open

BW Tulip

1.2018

173,400

BW Group

Daewoo

Voyage charters

GTTNo96

open

Vladimir Rusanov

1.2018

172,000

CSDC/MOL

Daewoo

Yamal LNG

GTTNo96

Yamal exports

Coral EnergICE

1.2018

18,000

Anthony Veder

Neptun

Skangas

Type C

Baltic trading

SK Serenity

2.2018

174,000

SK Shipping

Samsung

Kogas

KC-1

Sabine Pass exports

Magdala

2.2018

173,400

Teekay

Daewoo

Shell

GTTNo96

Shell business

Seri Camar

2.2018

150,000

MISC

Hyundai

Petronas

Moss

Petronas projects

LNG Sakura

2.2018

177,000

NYK/Kepco

Kawasaki

Kansai Electric

Moss

Cove Point exports

SK Spica

3.2018

174,000

SK Shipping

Samsung

Kogas

KC-1

Sabine Pass exports

Pacific Mimosa

3.2018

155,000

NYK

Mitsubishi

Jera

Moss

Wheatstone exports

Gaslog Genoa

3.2018

174,000

GasLog

Samsung

Shell

GTTMkIII

Shell business

Gaslog Hong Kong

3.2018

174,000

GasLog

Hyundai

Total

GTTMkIII

Total business

Pacific Breeze

3.2018

182,000

K Line

Kawasaki

Inpex

Moss

Ichthys-Taiwan

Castillo de Merida

3.2018

178,000

Elcano

Imabari

GNF

GTTMkIII

GNF business

BW Lilac

3.2018

173,400

BW Group

Daewoo

Voyage charters

GTTNo96

open

Hoegh Esperanza

4.2018

170,000

Hรถegh LNG

Hyundai

CNOOC

GTTNMkIII

FSRU; CNOOC charter

Marvel Falcon

4.2018

174,000

NYK

Samsung

Mitsui & Co

GTTMkIII

Cameron exports

Oceanic Breeze

4.2018

155,000

K Line

Mitsubishi

Inpex Corp

Moss

Ichthys exports

Seri Cemara

4.2018

150,000

MISC

Hyundai

Petronas

Moss

Petronas projects

Cesi Lianyungang

5.2018

174,000

CESI/MOL

Hudong

Sinopec

GTTNo96

APLNG exports

Myrina

5.2018

173,400

Teekay

Daewoo

Shell

GTTNo96

Shell business

British Partner

5.2018

174,000

BP

Daewoo

BP

GTTNo96

BP business

Castillo de Caldedas

6.2018

178,000

Elcano

Imabari

GNF

GTTMkIII

GNF business

LNG Schneeweisschen

6.2018

180,000

MOL/Itochu

Daewoo

Uniper

GTTNo96

Freeport exports

Diamond Gas Orchid

6.2018

165,000

NYK

Mitsubishi

Mitsui & Co

Moss

Cameron exports

Flex Ranger

6.2018

174,000

Flex LNG

Samsung

Voyage charters

GTTMkIII

open

Xinle 30

6.2018

30,000

PetroChina

Ningbo Xinle

CNPC Kunlun

Type C

China coast

Megara

7.2018

173,400

Teekay

Daewoo

Yamal LNG

GTTNo96

Yamal cargoes

Maran Gas Spetsos

7.2018

174,000

Maran Gas

Daewoo

Shell

GTTNo96

Shell business

Flex Rainbow

7.2018

174,000

Flex LNG

Samsung

Voyage charters

GTTMkIII

open

Pan Europe

7.2018

174,000

CNOOC/CLNG/TK/BW

Hudong

Shell

GTTNo96

QCLNG exports

Diamond Gas Rose

8.2019

165,000

NYK

Mitsubishi

Mitsui & Co

Moss

Cameron exports

LNG World Shipping, data as of 20 August 2018

www.lngworldshipping.com

LNG World Shipping | September/October 2018


68 | VIEWPOINT

Robust LNG supply and demand fundamentals set scene for tighter shipping market Despite the brisk level of newbuilding orders in 2018 and the current healthy state of the LNGC orderbook, the LNG shipping market could actually be short of vessels by 2019, writes GasLog chief executive Paul Wogan

T Paul Wogan (GasLog): “The earliest a newbuilding can now be delivered is 2021, which points towards a tighter market in 2019 and 2020 and underpins the outlook for shipping rates”

LNG World Shipping | September/October 2018

his is an exciting time to be in LNG shipping. LNG demand continues to surprise to the upside, eroding concerns of a near-term LNG supply overhang. Inter-basin voyages to exploit both the US – North East Asia, and Europe – North East Asia price arbitrage are driving tonne-miles higher, resulting in an increased demand for shipping. Against this supportive backdrop, GasLog continues to expand its fleet, with five newbuilds scheduled to deliver in 2019 and 2020, two of which are uncommitted and expected to enter a tightening market. Demand for LNG remains robust. According to Poten, LNG imports into China, South Korea and India during the first half of 2018 increased 50%, 14% and 10%, respectively. China’s LNG demand is being driven by several secular drivers: coal-togas switching, strong industrial demand and constrained domestic gas production. However, it is not all about China. Global LNG demand growth is expected to be broad-based; South East Asia and Europe, for example, are forecast to account for over 60% of demand growth from 2017 to 2025. On the supply side, several projects continue to make positive progress towards a final investment decision. Against this positive outlook for LNG supply and demand, we are seeing a meaningful pick-up in enquiries for both multi-month and multi-year shipping charters. Historically, each 1M tonnes of LNG shipped has required approximately 1.3 vessels. However, the advent of US LNG exports, based on cheap US gas prices, has led to increasing exports between the Atlantic and Pacific Basins. Since Sabine Pass came onstream in 2016, an average of 1.86 ships per M/tonnes of LNG has been required for US exports. Spot LNG shipping rates exhibited counter-seasonal strength in May and June 2018, driven by increased vessel demand

as LNG suppliers sought to capitalise on the inter-basin arbitrage. The number of spot fixtures rose to a record 110 during Q2 2018, a 41% increase year-on-year, and June spot shipping rates were at their highest since 2013. While spot shipping rates have moderated in recent weeks, based on current forward JKM pricing, the arbitrage between the Atlantic and Pacific Basins is expected to remain open for the 2018/19 Northern Hemisphere winter. This suggests that the recent increase in LNG shipping rates could be sustainable. According to Poten, 27 firm orders for LNG carriers have been placed so far in 2018, as shipowners lock in attractive yard pricing against a positive backdrop for LNG vessel demand. However, despite the current orderbook, we believe that the LNG shipping market could be short of vessels as soon as 2019, based on current supply and demand projections. Excluding yard options, the earliest a newbuilding can now be delivered is 2021. This points towards a tighter market in 2019 and 2020, again underpinning the outlook for shipping rates. Based on our analysis and excluding the current orderbook, north of 50 additional vessels may be needed by 2022 to satisfy projected market growth. This figure has the potential to increase to north of 130 additional vessels by 2025. The LNG shipping industry has an enviable safety record. It is one thing to own an LNG carrier, but operating and managing these vessels safely and to an industry-leading standard takes many years of experience. For that reason, I believe that GasLog’s operational excellence and uncompromising approach to safety remains a differentiating factor when our customers look to their future LNG shipping requirements. LNG

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LNG World Shipping September/October 2018  

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...

LNG World Shipping September/October 2018  

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...