Australian Compressed Natural Gas (CNG) project developer, Global Energy Ventures (GEV), has signed a Letter of Intent (LOI) with Yantai CIMC Raffles Offshore (CIMC Raffles) to build the company’s CNG Optimum 200 ships.
This LOI is based on a firm order for four 200 mill cu ft capacity CNG carriers with an option to order up to another four.
The parties have executed the LOI, with the intention of entering a shipbuilding engineering, procurement & construction (EPC) contract, employing GEV’s CNG Optimum design.
Earlier, three shipyards had completed comprehensive technical specifications for the vessels using the CNG Optimum design, which has been approved by American Bureau of Shipping (ABS).
This followed a targeted selection process led by GEV Director, Jens Martin Jensen, lasting for the past 12 months supported by the company’s shipbroker, Clarksons Platou (Clarkson’s) and SeaQuest Marine Project Management (SeaQuest), which provided ship engineering experience to assist in finalising the technical specifications.
The selection of CIMC Raffles was driven by the commercial terms under the LOI, track record of delivering in excess of $6 bill in EPC contracts since 2012, experience with CNG systems, and moving forward, its scale of operations with three yards to support GEV’s growth aspirations of multiple CNG projects requiring shipbuilding contracts, the company explained.
Martin Jensen said: “In my 30 years of new shipbuilds, CIMC Raffles have proven to be a highly credible and very capable yard for newbuilds, and they are without doubt an investment grade shipyard for GEV’s first marine CNG project.
“They are the logical choice for GEV given their scale of operations to support a multiple ship order, their history of building the only CNG ship to date, and a track record in successful EPC delivery.
“Together with our advisors, Clarksons and SeaQuest, we continue to focus on our preferred shipyards to refine their technical specification and capital cost improvements, and work towards a final draft contract.
“Executing our first LOI with a respected shipyard to deliver our first CNG Optimum contract is indeed a key milestone for GEV representing a major de-risking event,” he said.
Under the proposed shipbuilding contract, the CNG Optimum ships will be delivered on a 30 month construction schedule for the first ship, then every four months for the following three firm orders.
CIMC Raffles has offered a contract price in the range of $135-140 mill per ship, subject to the contract terms being finalised.
The cost remains within GEV’s capital range to ensure the CNG projects in development are commercially viable and provide the required rate of return to fund the future debt and equity requirements, the company added.