LNG

An important logistical link in Russian liquefied natural gas trading, a huge floating storage unit called “Saam FSU”, was heading past the Norwegian coast on June 20 for its destination port of Murmansk.

Kawasaki Kisen Kaisha, the Japanese shipping company known as K-Line, is planning an LNG carrier growth strategy focused on Qatar and with ship management operations being moved into southeast Asia.

JERA Co. Inc, the largest buyer of liquefied natural gas for Japan, has overhauled its senior management structure and appointed co-Chief Executives and removed the positions of Chairman and President.

Of the top ship-owning nations, the Greeks continue to outperform the nation’s size with a fleet ranked third globally behind Japan and China respectively in both the number of vessels and the total value, though Greece’s fleet value has been augmented by an increasing number of quality LNG carriers.

Nippon Yusen Kabushiki Kaisha, the Japanese shipping company known as NYK Line, increased fiscal first-half profits and revenues from shipping liquefied natural gas and other fuels worldwide as it also ordered five new LNG carriers to add to its fleet of 58 owned and co-owned LNG vessels.

NYK’s revenues soared by 30 percent for the six months from April to the end of September 2022 and amounted to 1.36 trillion Japanese yen ($9.31 billion) compared with 1.05 trillion yen ($7.16Bln) in the fiscal first-half of 2021.

Profits jumped by 71 percent and came to 706.06Bln ($4.81Bln) versus 411.32Bln yen ($2.80Bln) in the same six months of last year.

NYK said the profits grew even as bunkered fuel costs for its fleet of ships jumped by 76 percent year-on-year to average $839.95 per ton versus $477.42 per ton in the same six months of 2021.

The NYK LNG carriers are in the energy fleet of the company’s Bulk Shipping division.

The company’s fleet comprises 658 owned and co-owned vessels, including in the largest sector 382 bulk carriers, 113 energy tankers and associated vessels, 108 car carriers and 55 containerships.

Contracts

“In the LNG carriers unit, the results were steady based on support from the long-term contracts that generate stable earnings. Also, in the offshore business, FPSO (Floating Production, Storage and Offloading), drill ship and shuttle tankers were generally steady as expected,” said NYK.

Overall Bulk Shipping revenues came to 616.4 billion yen ($4.20Bln) in the six-month period.

In the Very Large Crude Carrier (VLCC) market, NYK said that there was a further rebounded off market lows from July. Then, after oil prices fell in mid-August following the release from the strategic petroleum reserve in the United States, shipments of oil from the Middle East and US in particular rose to destinations in Europe and Asia.

“Due in part to this, the use of VLCCs increased, causing supply-and- demand conditions to tighten and the market to rapidly recover. Thereafter, the higher shipment volumes continued into September,” explained NYK.

“In the petrochemical tanker market, due to the impact of the situation in Russia and Ukraine, the origin of shipments bound for Europe shifted from Russia to the United States, Middle East and India, resulting in longer sailing distances,” the company added.

NYK also said that a consortium it is part of had signed a long-term time-charter contract with QatarEnergy for five LNG carriers for delivery between 2025 and 2026 for Qatar's expansion of LNG production.

The partners of NYK in the newbuilds contract are Malaysian shipping company MISC Group and China LNG Shipping.

Shanghai yard

The joint-venture companies have executed shipbuilding contracts for the five vessels with 174,000 cubic metres capacity with Hudong-Zhonghua Shipbuilding of Shanghai.

“Over the past 39 years since the delivery of the LNG carrier ‘Echigo Maru’ in 1983, NYK has continued to enhance its LNG safety and expertise and worldwide LNG transport network,” said the company.

“The skills that NYK has acquired in safe and optimized navigation, the construction of LNG carriers, and high-level ship-management quality have earned high regard from QatarEnergy, leading to the successful conclusion of this contract,” declared the Chiyoda City-based shipping line.

“NYK and QatarEnergy have had a long-term relationship with several existing projects and the relationship will be further extended through this contract,” it added.

NYK said these five vessels will be equipped with the latest propulsion in the X-DF 2.1 iCER engines designed by Winterthur Gas & Diesel (WinGD), headquartered in Switzerland.

The X-DF low-speed, dual-fuel engines use gas admitted at low pressure and will reduce emissions and increase fuel efficiency.

The company added that the five LNG newbuilds will be around 299 metres in length with a moulded breadth of 46.40M and with speed capability of 19.5 knots.

JERA Co. Inc., the largest Japanese LNG importer and power utility operator, said fiscal first-quarter operating revenues from April through June 2022 more than doubled because of soaring sales by fuel trading subsidiary JERA Global Markets (JERAGM) as well as a year-on-year increase in electricity sales.

The American Bureau of Shipping, the US maritime classification society, has granted approval for an innovative concept for floating liquefied natural gas projects to use storage tanks from older LNG carriers.

The FLNG design was jointly developed by two Japanese companies, the shipping line Kawasaki Kisen Kaisha (K-LINE) and LNG and energy engineer JGC Corp.

ABS awarded an approval in principle (AIP) for the joint project which was also supported by Japan’s Ministry of Land, Infrastructure, Transport and Tourism.

The design essentially involves transferring and reusing LNG storage tanks from spherical Moss-type LNG carriers into the hulls of new FLNG facilities.

By re-using existing LNG vessels and their Type B storage tanks, the potential number of shipyards globally able to build FLNG units is increased.

The new Japanese design if it moves to production would support the forecast increase in demand for fast-track FLNG solutions.

“In many areas of the world, FLNG represents a potential solution to the challenge of meeting increasing demand for natural gas without the need for an export pipeline to shore and the associated infrastructure,” explained Tor Ivar Guttulsrod, the ABS Director for FLNG and FSRU vessels.

“ABS is committed to supporting development of FLNG globally while retaining a laser focus on safety,” stated Guttulsrod.

Expertise

Satoshi Kanamori, an Executive Officer at K-Line, said the design had potential to leverage shipping expertise and existing LNG assets.

“K-LINE will continue to make relentless efforts and generate new values to meet the diversifying needs of our customers,” added Kanamori.

JGC executive Hiroyuki Ishizaki agreed with the K-Line assessment as it was based on technical capabilities accumulated in FLNG and engineering, procurement and construction projects.

“This results in the enhancement of the customer's FLNG business since it is potentially an optimized CAPEX solution. JGC will continue to develop FLNG technologies for open seas and nearshore,” added Ishizaki. 

The latest Japanese ferry newbuilds on order with shipyards in Japan have opted not to have liquefied natural gas as part of the propulsion systems and will instead use exhaust-cleaners known as scrubbers to meet the sulfur cap on emissions from 2020 backed by the International Maritime Organization.

JERA Co Inc., the largest Japanese liquefied natural gas buyer and power assets owner, said it was overhauling its business while increasing its medium-term LNG activities with a larger carrier fleet as it aimed for 3.6 trillion yen ($33 billion) of sales in fiscal 2019.

The company said it now had volumes of LNG amounting to 35 million tonnes per annum, upstream investments in five projects and was increasing its LNG fleet from 18 vessels to 25 to ship its cargoes.

However, while LNG activities would focus on growth through 2030, after that date Japan’s needs for power generation could be different.

For its power generation arm of Tokyo Electric Power and Chubu Electric, JERA controls domestic power capacity of 67 gigawatts and a total of nine gigawatts of overseas output.

JERA said the direction was uncertain for Japan’s future power mix, though by 2030 it could have 20-22 percent nuclear power units in operation, 24-22 percent made up of renewable energy projects, 27 percent gas-fired plants supplied with regasified LNG, 26 percent coal-fired plants and 3 percent oil-fired plants.

Under the transition, Japan could replace more plants requiring LNG with renewable projects than other generating facilities, leading to a possible future decrease in LNG imports of around 14 percent after 2030.

The 2030 energy mix numbers differ significantly from the 2016 figures of 16 percent nuclear, 41 percent gas-fired plants using LNG, 33 percent coal and 10 percent oil.

“Population shrinkage and sluggish demand means that a constant growth of domestic demand for electricity can’t be expected in the future,” according to JERA.

Its figures suggest the Japanese population could drop to 93 million people by 2060 from 128 million at present.

JERA explained that its company structure would now comprise three separate departments overseeing the five main sectors of its business, fuel markets, fuel procurement, power plants, electricity sales and the domestic electricity market.

JERA said the role of its “Optimization Department” would assume greater importance in the future.

“It will be responsible for increasing profits through operational excellence in power plants and fuel terminals, as well as market trading of fuel, electricity and gas, based on the existing agreements,” said the company.

The company’s “Business Development Department” would also have a key role.

“It would increase returns by achieving the optimal asset portfolio through new installations and the replacement and restructuring of power plants,” added the company.

JERA’s “Operations & Maintenance Department” would be responsible for boosting returns by achieving high value-added services through “agile operations and cost reductions” in utilizing its infrastructure.

The company said it would use LNG and renewables to spark the transition to a clean-energy economy up to 2025.

“Through enhancing the LNG value chain and undertaking large-scale renewable energy development and constructing a complementary relationship between LNG-fired power and renewables, JERA will provide stable, economic and clean energy,” stated the company.

JERA said it would also implement “six measures” to achieve its strategy goals and to be a world leader in LNG and renewables.

“For LNG, we would maintain and expand our fuel procurement scale through replacement of domestic power plants with more efficient facilities and with expansion of generation,” it explained.

“We would leverage that scale for LNG trading expansion and upstream project participation and improve profitability along the entire value chain,” JERA added.

“For renewable energy, we would leverage our large-scale project development competence that we gained from the existing projects, promote development focusing on offshore wind power in particular, and grow it as one of the main pillars of the business in our future portfolio,” stated the company.