China ends the drought with fresh LNG contract -Shanghai International Maritime Information and Literature website

China ends the drought with fresh LNG contract
Home - News Room
PostTime:2010-02-05 07:57:59.0 View:54
China has broken the LNG newbuilding order impasse by signing up the first vessel to be confirmed for 21 months but an expected ownership split with Malaysia appears to have been abandoned. TradeWinds understands that China LNG Shipping (Holdings) Co (CLNG) - a joint venture between Cosco and China Merchants that handles LNG shipping for China National Offshore Oil Corp (CNOOC) - confirmed an order for one 147,000-cbm LNG carrier with Hudong-Zhonghua Shipbuilding (Group) late last week. The membrane-type vessel is due for delivery in 2012. A formal contract-signing ceremony for the newbuilding is expected to be held in Beijing this weekend. LNG-market players say the vessel is the first LNG carrier to be ordered since April 2008. They are optimistic of further orders this year, particularly for the PNG LNG project in Papua New Guinea and Gorgon in Australia, which would be an improvement on the empty orderbook for 2009. This week's order - which will rank as the sixth LNG carrier to be built in China - has been a long time in the making with talks going back over four years. The ownership of the vessel, which is contracted to serve CNOOC's newly opened Shanghai LNG terminal, is understood to be split between CLNG, CNOOC and Shanghai LNG, a joint venture between Shenergy Group (55%) and CNOOC's Gas & Power division (45%). Shanghai LNG will be the ship's long-term charterer. The vessel's shareholding has been the subject of a long-running dispute over the transport arrangements relating to Petronas of Malaysia's supply deal for the newly opened Shanghai LNG terminal. At one point, Petronas's shipowning subsidiary, MISC, and CLNG planned to split the ownership 50:50. But now it appears that MISC will take no part in the ship. The new Shanghai terminal, which kicked off operations in October, is being supplied under a 25-year sales-and-purchase agreement (SPA) with Petronas to supply up to 3.03 million tonnes per annum (mtpa) of LNG. The SPA dates back to 2006. Petronas is covering the current transport requirements. China handed over its fifth LNG newbuilding, the 147,000-cbm Dapeng Star , last month. Hudong-Zhonghua struggled with its first two LNG newbuildings and both had to undergo major repair jobs as a result. All five vessels were covered by longer than normal three-year warranty periods.
Source:Tradewinds Author:Lucy Hine London