Japanese and Chinese shipyards have their sights on one of the few
markets that isn't in the doldrums -- sophisticated tankers for
liquefied natural gas -- hoping to challenge market leader South Korea.
With demand for gas soaring in Asia and a North American gas
export boom just over the horizon, China's technical skills are
improving and Beijing wants importers to use more ships built at home.
Meanwhile, despite political tensions, Japanese shipbuilders are
preparing to build LNG tankers in China.
Kawasaki Heavy Industries Ltd., which makes other types of
ships with China Ocean Shipping (Group) Co., will expand this
cooperation to LNG carriers in the near future, a spokesman for the
Japanese company said. It hopes to get orders to build two or three LNG
carriers a year.
"Orders of new LNG carriers in the next five years could be
between 100 and 200, depending on how many North American projects come
to pass," said Yoshikazu Nakaya, a shipping analyst with Mizuho Bank.
"South Korean and Japanese shipbuilders will take most of them, but
Chinese shipbuilders may get a small part."
Of 134 LNG tankers built since 2009, 100 were made by South
Korean companies, 20 by Chinese companies and 13 by Japanese yards,
according to shipping-data provider IHS Maritime.
China could need around 60 new LNG tankers by 2020 to meet
demand for gas, according to Standard Chartered and law firm Watson,
Farley and Williams. That would add to the country's influence in the
market. LNG tankers typically cost around $250 million apiece. China is
building LNG terminals to facilitate delivery of imported cargo.
Japan and South Korea for decades have been the biggest LNG
users world-wide. Demand in the two resource-poor nations is growing as
debates rage over the use of nuclear energy. Gas use in China and India
also is ballooning.
In Canada, around a dozen projects to export LNG extracted
from shale rock are planned. These and similar ventures in the U.S. will
need fleets of ships to reach markets, mainly in Asia. LNG projects
being built or planned in Qatar, Australia, Russia and Africa will
further bolster order books.
Builders of LNG tankers need technical skill to install the
"moss" or "membrane" linings used in storage tanks and must make license
payments to the two European companies that designed them.
"Currently, many of the Chinese yards lack the technology and
quality controls required for sophisticated tanker construction," said
Gary Li, a senior analyst at IHS Maritime.
But they are learning fast, using government aid and collaboration with Japanese LNG shippers and yards.
Japanese LNG shipper Mitsui OSK Lines Ltd. in April said it
had won agreements for around $1.5 billion in orders for six LNG ships
to be built at Hudong-Zhonghua Shipbuilding Group Co. yards in eastern
Shanghai. The tankers, each with a capacity of 174,000 cubic meters,
will be used by China Petroleum & Chemical Corp., also known as
Sinopec Corp., to ship LNG from Australia.
The partners in 2011 won an order for four ships to carry LNG
produced by Exxon Mobil Corp. in Australia and Papua New Guinea to
China. Hudong-Zhonghua, a unit of state-owned China State Shipbuilding
Co., built its first LNG tanker in 2008.
In Japan, restructuring in the shipbuilding industry is
creating new economies of scale and improving purchasing power and the
transfer of technological know-how. Combined with a weak yen, that could
help win orders. Japan Marine United Corp. was created through a merger
in January.
In March, Mitsubishi Heavy Industries Ltd., Japan's biggest
LNG shipbuilder, and Imabari Shipbuilding Co. unveiled a partnership
able to build eight LNG carriers a year. "The joint venture will help us
a lot, as big LNG projects sometimes do not talk to shipbuilders with
small capacity. We'll be able to sit at the negotiation table," a
Mitsubishi Heavy spokeswoman said. The partnership hasn't yet secured
any LNG shipbuilding orders from North American projects, she said.
South Korean yards continue to pull in business. Daewoo
Shipbuilding and Marine Engineering Co. had 17 orders as of the end of
last month. The company said that as long as Chinese yards mostly supply
domestic customers, it is hard to see them as direct competitors, but
they have the potential to be rivals as they gain technical know-how.
South Korea's Hyundai Heavy Industries Co., citing data from
shipping specialist Clarksons, said it won 14 of 36 new orders
world-wide last year. It expects similar figures for this year and as of
November had received 11 orders.
China is emerging as threat to Korean yards, said Luis Benito,
a Singapore-based marketing manager for Lloyds Register. "Its presence
may push ship prices downwards."