LNG

Russian fleet owner Sovcomflot and Sakhalin Energy, operator of the LNG plant in the Russian Far East, signed long-term time-charter contracts for two existing LNG-powered tankers, which will be re-fuelled at the liquefaction and export plant.

Sovcomflot, the Russian shipping line with 31 gas carriers in operation or on order and an overall fleet of 145 vessels, posted a more than 18 percent jump in annual net profits as revenues also increased.

French energy company Total along with South Korean shipbuilder Hyundai Heavy Industries and Russian fleet operator Sovcomflot have concluded a deal with options as the build-out continues on the next generation of LNG vessels.

As part of the global fleet expansion, Sovcomflot and Total have concluded a time-charter agreement for up to seven years for a newbuilding LNG carrier with capacity of 174,000 cubic metres to be owned and operated by Sovcomflot, with options for up to two additional vessels.

A Web conference was held to mark the event attended by Igor Tonkovidov, President and Chief Executive Sovcomflot, Thomas Maurisse, Senior Vice President for LNG at Total and Seong-Yong Park, Senior Executive Vice President and Chief Operating Officer at HHI.

The new vessel will be the latest in a series of SCF’s new-generation conventional Atlanticmax LNG carriers, with three sister ships already in operation, the “SCF La Perouse”, the “SCF Barents” and the “SCF Timmerman”.

“The vessel will be fitted with an X-DF propulsion system, operated by a slow-speed diesel engine with a direct drive to the propellers, which will enable a substantial reduction in the vessel’s fuel consumption when compared with previous generations of LNG carriers,” the companies explained.

“The new carrier will also be fitted with a hull air lubrication system which, combined with two shaft power generators with frequency-to-current converters, is expected to deliver a further significant decrease in fuel consumption and greenhouse-gas emissions,” they added.

Another environmental feature of this series of new-generation LNG vessels is a partial re-liquefaction system, which allows cargo boil-off gas to be returned to the tanks.

Delivery of the carrier to the charterer is scheduled for the third quarter of 2023.

“We are pleased that SCF Group’s shipbuilding programme will be supplemented with a new gas carrier that meets all the current international standards regarding environmental protection, as well as the Charterer's requirements for energy efficiency, quality and navigational safety,” said Sovcomflot’s Tonkovidov.

“We are grateful to our valued partners at Total for the opportunity to participate in this interesting project which extends further our cooperation in LNG transportation with one of the world’s leading international energy companies,” added Tonkovidov.

“The success in Total’s project tender once again demonstrates SCF’s high standards and capabilities in LNG shipping as well as with other types of energy,” stated the Russian company’s CEO.

He added that the continued development of energy transportation services that serve long-term projects provide a fixed return element to the shipping line’s business model.

“It is in line with the corporate strategy approved by our shareholders and allows us to reduce the negative impact of conventional tanker freight market fluctuations on the Company’s results,” Tonkovidov concluded.

The Russian shipping line is now listed on the Moscow stock exchange after an initial public offering in October 2020. 

Sovcomflot, the Russian shipping line with an overall fleet of 145 vessels, said its LNG carrier, the “Christophe De Margerie”, reached Cape Dezhnev in Russia’s Far East to complete the earliest annual eastbound voyage carrying a cargo along the Northern Sea Route.

Zvezda Shipbuilding in the Russian Far East has held a steel-cutting ceremony for the first in a series of 15 ice-breaking LNG carriers ordered by the nation’s Sovcomflot shipping line to serve the Arctic LNG II export project being developed by natural gas company Novatek.

The Zvezda complex is located at Bolshoi Kamen on the coast of the Sea of Japan and about 12 miles northeast of the city of Vladivostok.

The shipbuilder is owned by a consortium of Russian energy companies, including Rosneftegaz, Rosneft and the financial affiliate of Gazprom, Gazprombank.

Shipbuilding, financing, lease, and time-charter contracts were signed last year by the four companies involved in ordering the 15 vessels, the first of which is scheduled for delivery in the first quarter of 2023.

Participants in the ceremony on November 20 included Yury Borisov, Deputy Prime Minister of the Russian Federation, Leonid Mikhelson, Chairman of Novatek, Igor Tonkovidov, President and Chief Executive of Sovcomflot and Sergey Tseluyko, Managing Director of Zvezda Shipbuilding and Daniil Algulyan, Deputy Chairman of VEB.RF, the Russian bank providing the financing.

“The steel-cutting for the lead vessel heralds the building of a new generation of ice-breaking LNG carriers,” said Sovcomflot (SCF).

“The design of these new vessels incorporates the many years of experience Sovcomflot has acquired in operating large vessels within challenging ice conditions,” it added.

“The engineering solutions selected for this class of vessel will enable increased speed and manoeuvrability when sailing in ice conditions, compared with ice-breaking LNG carriers of the previous generation,” explained the shipping line.

“This will, for the first time, allow year-round navigation in the eastern sector of the Russian Arctic, thereby expediting the implementation of national plans to boost cargo traffic along the Northern Sea Route,” it added.

All the vessels in the series will be assigned an Arc7 ice class.

The first LNG carrier of the series was ordered directly by SCF, while the other 14 vessels were ordered by Smart LNG, a joint venture of Sovcomflot and Novatek.

The shipbuilding process is being supervised by the Russian Maritime Register of Shipping.

During the ceremony, Deputy Federation Minister Borisov said that the start of work was preceded by a “tremendous effort” both in terms of organisation and production preparations.

“These vessels will significantly contribute to the development of cargo traffic along the Northern Sea Route, which is strategically important for Russia,” explained Borisov.

Each vessel will have capacity of more than 172,000 cubic metres and be 300 metres long and over 48 metres wide. Their power capacity is 45 megawatts, with each vessel equipped with three unique azimuth propulsion units.

“The start of construction of the first in this new generation of LNG carriers by Zevzda is a significant milestone for the Russian shipbuilding industry, which has never before constructed vessels with this level of engineering complexity,” said SCF CEO Tonkovidov.

“We are looking forward to continuing our close collaboration with our partners and are ready to further support the Russian civilian shipbuilding industry as part of the implementation of major energy projects,” stated the CEO.

All the 15 new LNG carriers will be registered under the Russian flag and will be operated by Russian crews.

The Arctic LNG II project is being developed with three gravity-based platforms and the estimated capital expenditure for the joint venture is now put at the equivalent of US$21.3 billion.

Arctic LNG will produce almost 20 million tonnes per annum of LNG as well as gas concentrate from the principal feed-gas resources, the Utrenneye gas field.

Novatek holds 60 percent of the Arctic LNG project and four other 10 percent stakes are shared between various shareholders.

The 10 percent holdings belong to French major Total, which is also a shareholder in the Novatek company, China National Petroleum Corp., China National Offshore Corp. and a Japanese investor group comprising Mitsui & Co. and the government institution, the Japan Oil, Gas and Metals National Corporation (Jogmec).

Sovcomflot, the Russian shipping line with 31 gas carriers in operation or on order and an overall fleet of 145 vessels, is now listed on the Moscow stock exchange and more than doubled nine-month net profits as it looked ahead to future long-term Arctic LNG charter earnings.

Sovcomflot, the Russian shipping line with 31 gas carriers in operation or on order in an overall fleet of almost 150 vessels, has taken delivery of its latest LNG carrier “SCF Barents”, chartered to Royal Dutch Shell and named after the 16th-century Dutch Arctic explorer Willem Barents.

The ship with capacity of 174,000 cubic metres was handed over at the Hyundai Heavy Industries shipyard in South Korea.

After the vessel’s naming ceremony, it embarked on its maiden voyage under a long-term time charter agreement with one of Shell’s subsidiaries.

Sovcomflot President and Chief Executive Igor Tonkovidov, attended the ceremony along with Cederic Cremers, Chairman of the Shell subsidiary in Russia.

Also representatives at the event were the executives of the three European banks which provided the shipping finance, ING Bank of the Netherlands, France’s Crédit Agricole and KfW IPEX-Bank GmbH of Germany.

Shell executive Catherine Hall, the General Manager of Global Operations and Commercial Services at Shell Trading & Supply was the vessel’s sponsor at the ceremony.

“SCF Group and Shell have enjoyed a long-standing partnership, which both parties seek to consistently expand and reinforce,” said CEO Tonkovidov of Sovcomflot, also known as SCF Group.

“For many years, Shell has been amongst the largest charterers of SCF’s vessels,” he added.

“The delivery of ‘SCF Barents’ is important as growing our fleet of gas carriers is a strategic priority for SCF,” stated Tonkovidov.

“With the delivery, we now have 15 gas carriers in operation, with another 16 under construction. Thus, two-thirds of all vessels currently ordered by SCF are destined to expand our gas fleet,” he explained.

The “SCF Barents” is the second vessel in a series of three with 174,000 cubic metres capacity in the new-generation Atlanticmax series ordered by SCF in 2018.

The first vessel of the series, “SCF La Perouse”, was delivered in February 2020.

“All vessels in the series are designed to maximise their energy efficiency and meet the most stringent environmental standards, with their fuel consumption substantially reduced compared to the preceding generation of vessels,” said SCF.

“Each LNG carrier is equipped with an advanced Mark III Flex cargo containment system, slow-speed dual-fuel X-DF engine, and a system that reduces nitrogen-oxide emissions while the vessel sails in liquid fuel mode,” the shipping line added.

“In addition, all vessels of the series are among the first globally to feature a boil-off gas partial re-liquefaction system, which significantly reduces cargo losses while on long voyages or awaiting cargo operations,” said SCF.

SCF is developing into one of the world’s premier energy shipping companies, specialising in crude oil, petroleum products and liquefied gas, as well as the servicing of offshore oil and gas production.

The Group’s fleet has total deadweight of over 12.7 million tonnes, including vessels owned through joint ventures. More than 80 vessels are of ice class for Arctic waters.

A Russian joint venture involving fleet owner Sovcomflot and natural gas company and LNG developer Novatek has signed contracts with a Russian bank and Zvezda Shipbuilding in the Far East to construct and lease 10 ice-breaking Arc-7 class LNG carriers.

The venture called Smart LNG has simultaneously signed long-term time-charter agreements for these 10 vessels with the Novatek-led Arctic LNG II project.

In total, contracts for 15 such vessels have now been signed, including shipbuilding, financing with Russian bank Veb.Rf Group, leases and time-charter contracts.

The Arctic LNG II project being developed with three gravity-based platforms and the estimated capital expenditure for the joint venture is now put at the equivalent of US$21.3 billion.

Arctic LNG will produce 19.8 MTPA of LNG as well as gas concentrate from the principal feed-gas resources, the Utrenneye gas field.

Novatek holds 60 percent of the Arctic LNG project and four other 10 percent stakes are shared between various shareholders.

The 10 percent holdings belong to French major Total, which is also a shareholder in the Novatek company, China National Petroleum Corp., China National Offshore Corp. and a Japanese investor group comprising Mitsui & Co. and the government institution, the Japan Oil, Gas and Metals National Corporation (Jogmec).

The contracts for the lead ship in the series were signed by Socomflot in October 2019 and the contracts for another four sister ships were signed by Smart LNG in January 2020.

Sovcomflot, also known as SCF, continues to implement its strategy, with the goal of steadily growing the company’s value through expanding its portfolio of long-term industrial shipping contracts.

“The company point as a special focus on operations in challenging climatic and ice conditions,” said Sovcomflot.

“With 10 long-term time charters added to this portfolio, SCF $20 billion in contracted future earning and receivables,” stated the Russian shipping line.

The vessels will be operated under the Russian Federation flag and the Russian Maritime Register of Shipping (RS) will provide supervision during the construction of the vessel series.

The Zvezda complex is located at Bolshoi Kamen on the coast of the Sea of Japan and about 12 miles northeast of the city of Vladivostok.

The shipbuilder is owned by a consortium of Russian energy companies, including Rosneftegaz, Rosneft and the financial affiliate of Gazprom, Gazprombank.

“Shipbuilding and time charter contracts for 15 Arc7 LNG carriers, signed between 2019-2020, enable the Russian shipping community to play a role in transporting cargoes of strategic importance for the Russian economy, which are generated by large-scale energy projects in the Russian Arctic,” said Igor Tonkovidov, President and Chief Executive of Sovcomflot.

“These contracts will also help to further develop our national expertise in ice navigation and create over 850 new jobs for Russian seafarers, as all the 15 vessels will have Russian crews,” explained Tonkovidov.

“We are pleased to see that this new generation of Arctic LNG carriers, which will contribute significantly to growing the cargo traffic along the Northern Sea Route, was designed based on SCF’s long-standing experience of safely operating vessels in ice conditions,” stated the Sovcomflot CEO.

Sovcomflot bases its success in developing long-term partnerships with key customers, including Gazprom, Novatek, Lukoil, Royal Dutch Shell, French major Total, Exxon Neftegaz and Sakhalin Energy.

The Russian line’s fleet comprises 146 vessels with a total deadweight of 12.6 million tonnes, including ships owned through joint ventures. More than 80 vessels have an Ice classification.

Sovcomflot, the Russian shipping line with 16 liquefied natural gas carriers and an overall fleet of 147 vessels, returned to annual profit amid plans to expand its LNG carrier fleet and its number of LNG-powered tankers.

Sovcomflot Group, the Russian fleet owner, said it signed an agreement with ship fuel provider, Gazprom Neft Marine Bunker, to cooperate on bunkering operations for ships powered by liquefied natural gas.