Although Korean shipbuilders maintain the world's number one position in the LNG carrier market, they rely on a French company for a key technology for storing LNG and pays it 5 percent of its contract money as a royalty whenever they build an LNG carrier.
To store and transport LNG, a membrane system is required to separate the liquid gas at -163 degrees Celsius from the ship's hull and to reduce evaporation. The French company GazTransport & Technigaz (GTT) has patented LNG membrane tank technology.
The three Korean shipbuilders -- Hyundai Heavy Industries Group, Daewoo Shipbuilding & Marine Engineering (DSME) and Samsung Heavy Industries -- have also developed their own LNG membrane tank technology. But they have difficulty finding clients who will allow them to apply their self-developed technology to their ships. There have been no ship owners who allowed them to use unproven technology in building their vessels, which cost 200 billion won per ship. The Korean shipbuilders say that they would the jackpot if they begin to take orders for ships loaded with their in-house membrane tank technology.
To this end, Hyundai Heavy Industries and DSME are pulling out all the stops to publicize their design technology for LNG carriers. They recently participated in the Gastec Exhibition, one of the world's three major international gas and oil industry exhibitions, and showcased LNG cargo design technologies such as HiMEX and SOLIDUS.
LNG membrane tank technology is considered core technology for LNG carriers. The Korean shipbuilders will be able to win an order if they receive an AiP, an approval for basic design.
But the technology has not been used yet. In 2011, Samsung Heavy Industries introduced KCS, the first of its kind in Korea's shipbuilding industry. "Ship owners are conservative,” said an industry insider. “An LNG carrier usually costs about US$200 million, so clients are not willing to use unproven products." Most clients want to have GTT’s technology used in building their ships.
Korean shipbuilders have already been recognized for their strong ability to build LNG carriers. Last year, the Korean shipbuilding industry regained the top spot after beating the Chinese shipbuilding industry in seven years. This is attributable to Korean shipbuilders’ landing of 66 out of the global total 70 LNG carrier orders (94 percent).
The combined share in the world LNG carrier market of the Hyundai Heavy Industries Group and DSME is 60 percent. The Hyundai Heavy Industries Group and DSME are pushing for a marriage and their combined share in the world LNG carrier market 60 percent. In the first eight months, the Korean shipbuilding industry maintained its number one spot, sweeping LNG carrier orders from around the world.
The more LNG carrier orders the Korean shipbuilding industry wins, the more loyalties it has to pay to GTT. As Korean shipbuilders pay US$200 million per LNG carrier as loyalties to GTT, they pay 10 billion won in total to GTT.