LNG

Qatar Petroleum has entered into an agreement worth more than $3 billion to reserve LNG ship construction capacity in China to be used for construction of additional ships for the Gulf nation’s LNG expansion plans.

The agreement was entered into between Qatar Petroleum and Hudong-Zhonghua Shipbuilding Group Co., a wholly owned subsidiary of China State Shipbuilding Corp. (CSSC).

“Pursuant to the agreement, a significant portion of Hudong's LNG ship construction capacity will be reserved for Qatar Petroleum through the year 2027,” said a statement.

The Qataris had been expected to centre most of their carrier building in South Korea but have surprisingly chosen China over the Koreans for the first tranche of berth reservations.

The agreement on. berths was signed by Qatari Minister of State for Energy Affairs, the President and Chief Executive of Qatar Petroleum, Saad Sherida Al-Kaabi, and the Chairman of CSSC Lei Fanpei, in a virtual ceremony.

“The value of this landmark agreement has the potential to be well in excess of 11 billion Qatari riyals ($3.02Bln), depending on our requirements and the extent of China's LNG shipbuilding capacity expansion,” stated Al-Kaabi.

This would suggest an initial booking to build at least 16 or up to 20 ships in China.

Also present at the transmitted event was Qatargas CEO Khalid Bin Khalifa Al Thani and the Chairman of the Hudong shipyard Chen Jianliang, as well as other senior executives.

“We have taken yet another concrete step to reinforce Qatars commitment to its global reputation as a safe and reliable LNG producer at all times and under all circumstances,” said QP CEO Al-Kaabi.

“By entering into this agreement to reserve a major portion of Hudong's LNG ship construction capacity through the year 2027, we are confident that we are on the right track to ensuring that our future LNG fleet requirements will be met in due time to support our increasing LNG production capacity,” he added.

The South Korean shipbuilders Samsung Heavy Industries, Hyundai Heavy Industries and Daewoo Shipbuilding & Marine Engineering, which has merged with Hyundai won all of the last round of Qatari newbuilds.

Between 2004 and 2007, Qatar ordered 45 LNG carriers from the Korean yards when Daewoo built 19 Qatari carriers, Samsung constructed 18 vessels and Hyundai received orders for eight ships.

Now the Qataris have first booked Chinese berths for the start of its shipbuilding programme, which could amount to at least 80 vessels, according to previous statements.

The global LNG fleet consisted of 601 vessels at the start of 2020, including medium-scale vessels of up to 50,000 cubic metres capacity,

A total of 44 newbuild vessels were delivered into the fleet in 2019 while 62 units were ordered versus 77 newbuilds in 2018, mostly from the Korean yards.

Qatar has start developing its drilling campaign for the Persian Gulf feed-gas from the North field that will underpin the feed-gas needs for the LNG expansion at Ras Laffan from 77 million tonnes per annum to 110 MTPA.

A second phase of the North Field LNG expansion, called the North Field South Project (NFS), will further increase Qatar's LNG production capacity from 110 MTPA to 126 MTPA.

The scope of the first phase of the expansion at the Ras Laffan production complex involves an additional four Trains, each with 8.0 MTPA of output.

Qatar is also expected to have partnerships with international energy majors for its expanded North Field-based projects.

Qatar has the southern portion of the North Field in Gulf waters and the other part is under the jurisdiction of neighbouring Iran.