Other Agreements with S. Korean Shipbuilders Set to Follow
Qatar has signed a deal with a Chinese shipbuilder for the first batch of its project to build 120 LNG carriers.
According to TradeWinds, the world’s biggest shipping news service, Qatar Petroleum (QP) has signed a milestone LNG newbuilding berth reservation deal for a potential 16 vessels worth 20 billion yuan (US$2.85 billion) with Hudong-Zhonghua Shipbuilding Group.
The report added that other agreements with South Korean shipbuilders are set to follow.
The contract with the Chinese shipbuilder involves 16 units -- eight confirmed units plus eight optional units. They will be delivered between 2024 and 2025. Each vessel is approximately 175,000 cubic meters in size and costs approximately US$180 million.
The agreement marks the start of the world's largest LNG carrier procurement project by Qatar. The project has received much attention from the three major Korean shipbuilders — Hyundai Heavy Industries, Samsung Heavy Industries, and Daewoo Shipbuilding & Marine Engineering (DSME). They all submitted a final proposal, as did China's Hudong-Zhonghua.
"This agreement was reportedly reached on the condition that China buys natural gas from Qatar. In other words, Hudong-Zhonghua did not beat the Korean companies in the actual tender," said an industry insider.
Qatar, the world's largest LNG producer, is planning to expand its annual LNG output from 77 million tons to 126 million tons by 2027.
Qatar's Energy Minister Saad Al-Kaabi said in an interview with S&P Global Platts that Qatar will build at least 60 to 80 LNG carriers and will sign slot reservation contracts for up to 120 vessels. He added that Qatar has signed a contract with a shipyard for the first batch and will sign contracts for the remainder before this summer.
If Qatar places orders for 60 to 80 LNG carriers, the total order amount is estimated to be US$10.8 billion to US$14.4 billion. If the order volume increases to 120 units, the project will grow to about US$21.6 billion.
“Since China's Hudong-Zhonghua has a capacity of building five LNG carriers per year, it is unlikely to be able to win additional orders,” a shipbuilding analyst said. “I expect Qatar to additionally place orders for about 50 units, with most of them going to Korean shipbuilders.” The three Korean shipbuilders are able to build about 50 LNG carriers a year.