Hyundai Gets $1.5B LNG Order as Qatar Awards Charter to Asian Partners

State-owned energy giant QatarEnergy has awarded a consortium of four Asian shipping companies a long-term time charter for the operation of seven liquefied natural gas carriers as the latest step in its efforts to secure capacity to support the expansion of its LNG operations. It is the latest in a series of deals to build LNG carriers in South Korea and China as the shipping industry faces a shortage of gas carriers to meet current demand. Qatar is reporting that it recently became the leading exporter of LNG even before the North Field East expansion, which will further increase output by more than 40 percent.

The latest charter calls for the construction of seven 174,000 cubic meters LNG carriers at Hyundai Heavy Industries. The shipyard announced the contract, which brings its total to 17 LNG carriers ordered for shipping companies that will operate under long-term charters with QatarEnergy. Hyundai valued the new contract at $1.5 billion with the ships due to be delivered in 2025 and 2026.

Unlike the earlier orders, these seven LNG carriers will be operated by a consortium of companies. Four companies, Malaysian firm MISC Berhad, Japan’s Nippon Yusen Kaisha (NYK) and Kawasaki Kisen Kaisha (K Line), and China LNG Shipping, will participate in the partnership.

The companies highlighted that the new ships will be equipped with eco-efficient technologies. Among these systems, they will include low-speed dual-fuel X-DF 2.1 engines with intelligent control exhaust recycling. They will also employ an air lubrication system, which will further contribute to the reduction of greenhouse gas emissions. The vessels will have an overall length of 980 feet and a speed of 19.5 knots.

The awarding of the long-term charter is the latest in a series of contracts that QatarEnergy has signed in recent months as the company implements its mega LNG expansion project geared at increasing annual LNG production and exports from 77 million tonnes to 110 million tonnes. The project will ensure that Qatar becomes the largest exporter of LNG.

This spring, the United States claimed the title of the largest LNG exporter in part driven by the strong demand from Europe. A Kuwait-based investment firm, Kamco Invest reported however that Qatar’s total LNG exports reached $11.9 billion in April 2022 after a long-term maintenance project. They reported that production was up from $5.8 billion in April 2021 and placed Qatar in the number one position for LNG exports. China is Qatar’s main export market followed by India and Japan.

QatarEnergy announced plans for the expansion of the global LNG carrier fleet two years ago. The company pre-reserved building spots with South Korea’s three leading shipbuilders to support its North Field project. Building slots at South Korea’s shipyards, which have historically been the leading builders of gas carriers, are filling up leaving other producers to search for shipbuilding capacity. The shortage of ships and strong LNG demand led Panos Mitrou, Global Gas Segment Director at Lloyd’s Register, to forecast that there will be a shortage of shipping capacity to support LNG growth in the next few years. 

QatarEnergy however has been planning for years for its expansion project, which is the single largest project in the history of the LNG industry. They anticipate building as many as 100 ships to support the project which is projected to cost $28.7 billion. The expansion is being implemented in partnership with Italian company Eni and British multinational Shell and is expected to start production before the end of 2025.