LNG

Petróleo Brasileiro S.A., the Brazilian major known as Petrobras, has signed an accord with Turkey’s Karpowership to combine their expertise to expand projects in Brazil in the floating liquefied natural gas, regasification and liquefaction sectors.

Japanese shipping company Mitsui OSK Lines (MOL), whose energy business fleet includes over 150 tankers for oil and other products and about 90 LNG carriers, reported tumbling profits and a fall in revenues amid global shipping market disruptions.

China’s Hudong-Zhonghua Shipbuilding, an affiliate of China State Shipbuilding Corp. (CSSC), has won a contract from Japanese shipping company Mitsui OSK Lines (MOL) to build six LNG carriers.

Sept 14 (LNGJ) - Mitsui OSK Lines, the Japanese shipping company, has signed time charter contracts for four newbuild LNG carriers with a subsidiary of Russian LNG plant owner and developer Novatek. MOL said its vessels with 174,000 cubic metres capacity would be constructed in South Korea by Daewoo Shipbuilding and Marine Engineering and are scheduled for delivery in 2024.

   “The newbuilding LNG carriers are equipped with the cutting-edge MAN Energy Solutions engines, which offer major improvements in fuel efficiency,” said MOL. “There is also a new design that generates less boil-off gas from cargo tanks through the use of the re-liquefaction unit on board, and a generator system that uses the rotating propeller shaft for power generation,” it added.

Mitsui OSK Lines, the Japanese shipping company with an operating fleet of almost 100 liquefied natural gas carriers, has changed an order with a South Korean shipyard because of the cancellation of the LNG import terminal project for the German North Sea port of Wilhelmshaven.

MOL said its order for a floating storage and regasfication unit (FSRU) with South Korean shipbuilder Daewoo Shipbuilding and Marine Engineering (DSME) had been altered to a conventional LNG carrier described as “super large”.

The Japanese shipping line was forced to act after German utility Uniper called off the Wilhelmshaven import project.

Mol ordered the FSRU from DSME in May 2020 and subsequently signed a charter on the ordered unit with the Wilhelmshaven project. The FSRU had been planned for delivery by the end of June 2023.

Wilhelmshaven is Germany's only deep-sea port in the North Sea and would have been capable of offloading the largest LNG carriers.

The FSRU for the German port was to have had capacity of 263,000 cubic metres capacity with a unique design tailored to large-scale imports. MOL already has an LNG vessel of similar size, the “MOL FSRU Challenger”.

Uniper, based in Düsseldorf, said at the end of 2020 that it was unlikely to pursue the LNG venture because of several factors, including the reluctance of market players to make binding bookings for import capacities.

Uniper has since then switched its focus to other fuels and under the name “Green Wilhelmshaven”, Uniper is working on a feasibility study for the development of a German hydrogen hub.

Wilhelmshaven was one of two LNG import terminals being planned by Germany at the start of 2020. The second is an onshore facility at Brunsbüttel, a port on the Elbe River, south of Hamburg.

However, with the demise of the Uniper-led Wilhelmshaven LNG project another German import development has come to the fore at the port of Stade, also on the Elbe.

Fluxys, the Belgian natural gas grid company and owner of the Zeebrugge LNG import terminal, has agreed to become a partner and operator for the Stade project, known as the Hanseatic Energy Hub.

Fluxys will be an industrial partner in Hanseatic Energy whose other additional investor is the Partners Group, a Swiss-listed private asset management firm.

Under the development plan, the German terminal will be located about 45 kilometres (28 miles) from Hamburg and be operational by 2026 with capacity of around 8.5 million tonnes per annum of LNG.

The terminal replacing Wilhelmshaven will also have facilities for reloading LNG carriers, supplying river barges for bunkering as well as truck and rail-loading capability.

Sembcorp Marine posted a net loss of S$192 million (US$138.3M) for the six months to June 2020, following the “severe deterioration” of activities at all its Singapore yards as a result of the Covid-19 pandemic and amid a planned de-merger from parent Sembcorp Industries.

Sembcorp Marine’s results in the same six months of 2019 had amounted to a loss of S$7M.

The first-half 2020 earnings showed group revenues were S$906M and the net order book had S$1.91Bln of work outstanding, including liquefied natural gas sector ships such as LNG-powered vessels, bunkering ships and floating LNG storage.

A total of 74 vessels were repaired or upgraded at Sembcorp Marine yards in the 2020 first half, less the half the total of 153 vessels in the first six months of 2019.

The Sembcorp construction and conversion work for LNG mainly affects projects involving joint ventures of Japanese shipping company Mitsui OSK Lines.

Since April, when the Singapore government imposed its Covid-19 “circuit breaker” measures, in particular movement restrictions that disallowed migrant workers from leaving their dormitories for work, there was a substantial reduction in the group’s operating yard workforce (including sub-contractors) from about 20,000 to 850 persons.

Sembcorp Marine’s Singapore yards had to stand down and discontinue production activities, resulting in significant delays to project executions.

As a consequence, all divisions posted losses for the six months period, with the exception of Repairs & Upgrades which reported higher profits.

The company said Specialised Shipbuilding revenue was S$35M, up from S$7M in the year-ago period on higher earnings for Roll-On-Roll-Off passenger (Ropax) ferries as well as the LNG bunker vessel projects.

Revenue from Repairs & Upgrades totalled S$258M, which was 5 percent higher than the $245M in the 2019 first half.

This was due to higher revenue per vessel at S$3.49M from several upgrade projects for floating storage and regasification units (FSRU) and cruise ships.

Revenue for the Rigs & Floaters segment was S$459M, well down on the S$1.22Bln recorded in the 2019 first half.

Offshore Platforms revenue was S$130M. This included platforms successfully delivered for the Tangguh gas modules project in June 2020 from Sembcorp Marine’s Batam yard in Indonesia.

Singapore’s state wealth fund Temasek recently stepped in to support a S$2.1Bl rights issue by Sembcorp Marine to help its finances and as it also demerges from its parent company Sembcorp Industries.

Temasek in 2019 had offered to buy control of another Singaporean conglomerate Keppel Corp, whose businesses includes the hard-hit rig-building sector.

Sembcorp Industries owns 61 percent of Sembcorp Marine.

Sembcorp Marine President and Chief Executive Wong Weng Sun said during an earnings call on July 15 that the company had been positioned for recovery in 2020 before being hit by the double crises.

“Given the delays in executing our existing projects, and with new orders likely to remain depressed in 2020, the group now foresees that recovery will be pushed out to 2021 and beyond,” explained Wong.

“While we have yet to announce significant new orders this year, we have resumed discussions on several project opportunities,” added the CEO.

He has also brought in pay cuts across the board in all divisions of the company.

Wong said he had volunteered to take a 50 percent pay cut, senior management will take 15 percent salary reductions and middle management will be paid 10 percent less.

All other employees in Singapore and overseas will take a 5 percent pay cuts, except for those earning under S$1,800 a month. 

Sembcorp Marine, the Singapore shipbuilding and repair yard owner, said its business has been substantially affected by Covid-19 slowing work on ships and platforms, including at yards building LNG vessels for bunkering, imports and floating power projects, while the oil price slump has hit orders.

Mitsui OSK Lines, with an operating fleet of almost 100 liquefied natural gas carriers, said the LNG division had a year-on-year increase in profits, reflecting stable earnings mostly generated through long-term charter contracts, including for eight newly built vessels.

French energy major Total said it signed a pioneering agreement to charter its first two Very Large Crude Carrier-type oil tankers equipped with liquefied natural gas propulsion.

French energy major Total and Japanese shipping company Mitsui Osk Lines have signed a long-term charter contract for a second large LNG bunkering vessel to be delivered from China in 2021 and deployed in the Mediterranean