- Daewoo Shipbuilding & Marine Engineering (DSME) said on Dec. 7 that it has signed a letter of intent to build 10 LNG-powered VLCCs with a European client.
- An LOI is a document of an agreement before a main contract. Industry experts say that both sides will finally conclude the contract during the first quarter of 2021.
- If the deal is sealed, DSME will build a 300,000-ton dual-fuel VLCC powered by oil or LNG for the first time.
- Current LNG carriers are loaded with engines made of aluminum and nickel alloys and stainless steel, but they have weak strength and are difficult to process.
According to recent news articles published in Business Korea and Argus Media, DSME is to build 300,000-ton dual-fuel VLCC powered by oil or LNG for the first time.
DSME expands its category of LNG-fueled vessels
DSME has expanded its category of LNG-fueled vessels into VLCCs from container ships, shuttle tankers and LPG tankers.
Dual fuel propulsion is a method in which either bunker C oil or LNG power ships loaded with diesel engines.
This method satisfies regulations on sulfur oxide emissions implemented by the International Maritime Organization (IMO) 2020, and can also cut ship operation cost.
LNG-powered ships and Korea update
Korea has been maintaining its technological edge in LNG-powered ships. To use LNG as fuel for ships, it must be transported in a liquidized state at minus 163 degrees Celsius, and cargo tanks and fuel tanks must be made of materials that can withstand extreme cold temperatures. “The vessels ordered to DSME this time will have a high-manganese steel fuel tank jointly developed with POSCO, along with a high-pressure dual-fuel propulsion engine,” said an official of the shipbuilding industry.
Current LNG carriers
Current LNG carriers are loaded with engines made of aluminum and nickel alloys and stainless steel, but they have weak strength and are difficult to process.
Also, it is not easy to secure a competitive edge in pricing as it contained a large amount of high-priced nickel.
Manganese, on the other hand, is drawing attention as a next-generation material as it is cheap and feature cryogenic properties.
LNG-powered ships 20 to 30 percent more expensive
This fact makes LNG-powered ships 20 to 30 percent more expensive than other ships. The unit price of VLCCs is around US$85 million in 2020, but the unit price of the ships that DSME signed a letter of intent to build reaches up to US$100 million, industry experts say.
Hyundai Mipo Dockyard
In 2016, Hyundai Mipo Dockyard won an order for the world’s first 50,000-ton LNG-powered bulk carrier, while Hyundai Samho Heavy Industries built an 110,000-ton LNG-powered crude oil carrier and delivered it to its client in 2018.
So far, Hyundai Heavy Industries Group has won a total of 44 LNG-powered ships (excluding LNG carriers), leading among the Big 3 Korean shipbuilders.
Samsung Heavy Industries also built a 110,000-ton LNG-powered crude oil carrier in 2019.
However, DSME signed a letter of intent to build the 300,000-ton vessel, which is different from the above-mentioned other ones.
Abu Dhabi’s state-owned Adnoc
Abu Dhabi’s state-owned Adnoc may fit three new very large crude carriers (VLCC) it ordered from South Korean Daewoo Shipbuilding and Marine Engineering (DMSE) with LNG-fuelled engines.
Adnoc has ordered three VLCCs for delivery in the first quarter of 2023, DSME said, adding that the contract includes the option for three more tankers.
The firm’s order for the first three vessels is worth 282bn won ($260mn).
What does the contract include?
The contract also includes the option to deliver the vessels with dual-fuel propulsion systems that would enable the carriers to run on LNG.
Three more LNG-fuelled VLCCs are already under construction, according to shipbroker SSY.
Total signed an agreement in April to charter two VLCCs from Malaysian shipowner AET, which were scheduled to be delivered in 2022.
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Source:Business Korea & Argus Media
