Korean Shipbuilders Stand to Benefit
Q-Flex and Q-Max LNG carrier ordering is being resumed this year after a hiatus of about 10 years. In this market segment, major South Korean shipbuilders, that is, Korea Shipbuilding & Offshore Engineering, Daewoo Shipbuilding & Marine Engineering and Samsung Heavy Industries are the only experienced companies. They are expected to benefit a lot from the resumption, in that the price of each Q-Flex or Q-Max LNG carrier is approximately 300 billion won.
South Korean shipbuilders won eight LNG carrier orders this month, including six in the segment of those with a capacity of at least 200,000 cubic meters. Specifically, Korea Shipbuilding & Offshore Engineering and Daewoo Shipbuilding & Marine Engineering won three each. For reference, the order count in the segment stood at six in the period of 2019 to 2021.
LNG carriers are divided into conventional (17,500 to 180,000 cubic meters), Q-Flex (approximately 210,000) and Q-Max (approximately 260,000). The first Q-Flex and Q-Max orders were placed by Qatar in the early 2000s.
The number of such orders reached 30 or so in the late 2000s. Then, it did not increase at all until last year. This is because most ports are incapable of accommodating those large ships, 350 meters or so in length and at least 50 meters in width, although the ships are cost-competitive by carrying a large amount.
The resumption of ordering is because the importance of LNG as a green fuel is rising. According to Shell, the global LNG demand is estimated to increase from 380 million tons to 700 million tons from 2021 to 2040 and the resumption has to do with the fact that overland transport from Russia to Europe is being replaced with maritime transport after its invasion of Ukraine.
According to industry sources, the six new LNG carriers are to transport U.S. shale LNG, Qatar is planning to order more than 100 LNG carriers for six years to come, and most of the ships are likely to be Q-Flex or Q-Max. This is good news for the three shipbuilders. The price of each of the six ships is about 290 billion won whereas the average price of 174,000 cubic meter LNG carriers, which are an industry standard, is 240 billion won or so.