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KOGAS to Design LNG Tank to Skip 300 Billion Won Annual Royalties
Domestic Innovation
KOGAS to Design LNG Tank to Skip 300 Billion Won Annual Royalties
  • By Jung Min-hee
  • July 21, 2015, 03:15
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LNG tanks installed on a Moss-type LNG carrier.
LNG tanks installed on a Moss-type LNG carrier.


The Korea Gas Corporation (KOGAS) has joined hands with the nation’s three major shipbuilders – Hyundai Heavy Industries, Samsung Heavy Industries, and Daewoo Shipbuilding & Marine Engineering – to establish the nation’s first specialized company to design liquefied natural gas (LNG) carrier tanks.

A senior government official said on July 20, “In July, KOGAS and the top three shipbuilders have asked for permission to build a joint venture company. The government’s approval will be given sooner or later, so they may start working on processes for the establishment as early as next month.”

In a bid to reduce uncertainty at the inception, the joint venture will be established in the form of a subsidiary, while KOGAS holds more than 50.1 percent shares in the company. The three shipbuilders will own a stake according to the ratio of investment each. KOGAS and the three shipbuilders are planning to set up the joint venture in Dec. and to privatize it by selling its shares to the public stage by stage when the company becomes a major player in the market.

Until now, the top three shipbuilders have had to pay royalties of 10 billion won (US$8.66 million) per vessel to France-based engineering company GTT, which monopolizes the market, since they did not have a tank design technology. The three shipbuilders are said to pay annual royalties worth 300 billion won (US$259.74 million) to GTT in order to use its technology.

Once the company is jointly founded by KOGAS, a big buyer in the global gas market, and the nation’s largest shipbuilders, the global LNG tank design market, which is currently monopolized by French companies, is expected to face a great upheaval.

An LNG storage tank is a specialized type of storage tank used for the storage of natural gas, which is condensed into the liquid state by chilling it to -162 degrees Celsius to reduce it to one six-hundredth of gaseous volume. It is also often called the “heart” of an LNG carrier. If the temperature within the tank varies by even one degree, natural gas will vaporize or the steel plates will break from freezing. Accordingly, high technical skills are needed to design the tank. In 2004, the Ministry of Trade, Industry and Energy, KOGAS, and the three shipbuilders started developing a tank design technology, and succeeded in developing the KC-1 technology last year after 10 years of development.

The domestic LNG tank design technology will be first used in Samsung Heavy Industries’ LNG carriers which will participate in the U.S. shale gas project called Sabine Pass from 2017. The technology to produce LNG tanks will be used in LNG carriers to be manufactured by KOGAS and the nation’s top three shipbuilders, saving royalties to overseas companies. Also, the companies are expected to see profits from royalties by exporting the technology to overseas shipbuilders.