China joins LNG shipbuilding club

China’s shipbuilding industry has entered into the liquefied natural gas (LNG) shipbuilding market with the signing of the country?s first newbuilding contract for this ship type. Hudong-Zhonghua Shipbuilding (HZS), a subsidiary of China State Shipbuilding Corp (CSSC), is to build three147,000 cubic metre LNG carriers the LNG project in southern Guangdong Province.

This project is expected to be operational in mid-2006 and involves importing over 3 million tonnes of LNG from Australia annually. The first two LNG vessels, representing a total investment of $400 million, will be delivered in October 2007 and early 2008 with the last unit scheduled for delivery later that year.

The gas carriers are jointly owned by China Shipping, China Merchants Group, Upper Horn Investments of Guangdong Yuedian Group, Shenzhen Marine Company, Australia LNG (ALNG) and the Energy Transportation Group. Each ship will be able to deliver about 1.42 million tonnes of LNG a year from Withnell Bay in Australia to Dapeng Bay in Guangdong.

Before the first vessel is delivered, ALNG will provide a vessel to meet the requirements of shipping LNG in the initial period. “Building of this first LNG vessel indicates China’s shipbuilding industry has entered a higher level, and it will help improve the industry’s competitiveness in the world market,” said Gu Baolong, chairman of HZS. The shipyard has already completed 90% of the ship?s design while 80% of the equipment order has been completed.

To date, only Japan, South Korea and some European countries have the ability to build LNG vessels.