LNG

Chevron Corp. has said liquefied natural gas was a key component of the energy transition on land and at sea and plans to upgrade its fleet of 10 LNG carriers at the Singapore shipyard of Sembcorp Marine Ltd.

Chevron through its subsidiary Chevron Shipping Company has signed an agreement with Sembcorp Marine Repairs & Upgrades, a unit of Sembcorp Marine, to help reduce the carbon-intensity of its LNG fleet operations.

“Under the agreement, with Sembcorp Marine’s support, Chevron will install new technologies aboard Chevron vessels to support their energy transition goals,” said a statement.

“The changes are also in alignment with decarbonization targets set by the International Maritime Organization,” Chevron added.

Chevron Shipping operates a fleet of around 30 ships from conventional crude and petroleum product carriers to LNG carriers.

In addition to providing marine transportation for the company, Chevron Shipping provides technical, commercial and operational support to projects such as the Gorgon LNG and Wheatstone LNG export plants in Western Australia.

LNG technologies

Chevron said its LNG fleet plans included installing new technologies such as a reliquefication system, hull air lubrication and new gas compressors.

The company expects that all these measure together are expected to reduce cargo boil-off, lower fuel consumption and increase volumes of cargo delivered.

“We are excited to work with Sembcorp Marine to help us advance our lower carbon goals,” said Mark Ross, President of Chevron Shipping.

“We believe LNG will be a key component of the global energy transition for years to come and Chevron is focused on continuing its disciplined capital investment in our LNG fleet,” added Ross.

Chevron stated that Sembcorp Marine had significant expertise in complex LNG fleet modifications and a proven track record for lower carbon solutions for the maritime industry.

The Singaporean company will provide Chevron with engineering, procurement, installation and commissioning services and expects to complete the work by mid-2025.

“Sembcorp Marine is committed to advancing environmental sustainability through the development of industry-leading solutions,” said Wong Weng Sun, Sembcorp Marine President and Chief Executive.

“Working with Chevron on its LNG fleet upgrades is an immediate way to accelerate the lowering of the carbon footprint in the maritime industry, to achieve the IMO’s target to reduce emissions from international shipping by at least half,” added Wong. 

Sembcorp Marine Ltd, together with its subsidiaries, have celebrated the naming of its first of a series of LNG-hybrid tugs specially designed for domestic service in the Port of Singapore.

Pavilion Energy of Singapore and Japanese shipping company Mitsui OSK Lines held a ship-naming ceremony at Sembcorp Marine’s Tuas Boulevard shipyard for the 12,000 cubic metres capacity bunkering vessel “Brassavola”, the largest of its kind to be built in the Asian city state.

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.