SEOUL: Korea Shipbuilding & Offshore Engineering (KSOE) has mostly filled its order book for the next two and a half years as the pandemic drove demand for container ships, leaving little room to meet the needs of the liquefied natural gas (LNG) sector, a senior company executive says.
With United States LNG exports rising, more LNG carriers are travelling longer distances to customers in North Asia and Europe while European countries have snapped up floating storage and regasification units or FSRUs as they ramp up LNG imports to replace Russian gas supplies in the wake of the Ukraine crisis.
However, shipyards in South Korea and China are unable to accommodate demand for new LNG vessels as they work to meet a flood of orders for new container ships following global supply chain disruptions and port congestion that have held up ships in the United States and China.
This supports spot chartering rates for LNG carriers which have hit all-time highs. “A huge volume of new-build orders have taken up slots in China and South Korean shipyards,” K W Kim, senior vice-president at Hyundai Heavy Industries, flagship unit of the world’s largest LNG carrier builder KSOE, told Reuters.
KSOE’s capacity is nearly full with orders stretching to 2025, he said, adding that container ships and LNG carriers each accounted for about 30% of slots. KSOE builds 20 to 22 LNG carriers per year.
Shipyards are also struggling to expand due to labour shortages while grappling with a more than 15% increase in prices for key material steel plates, Kim said.
In 2020, Qatargas and TotalEnergies had booked shipbuilding slots for LNG projects in Qatar and Mozambique respectively, he said, while US LNG producers are also seeking more vessels as they ramp up exports.
“Shipowners enjoy good charter rates,” Kim said. — Reuters