19 April 2019

Green drive to buoy demand for LNG vessels

As China promotes the use of natural gas as a substitute for eco-unfriendly oil and coal, imports of liquefied natural gas (LNG) will rise further in the coming years, boosting the demand for large shipping vessels to carry the vital resource.

Basically, the vessels fall into two categories – LNG carriers and LNG-powered ships. China has huge appetite for gas resources overseas. The big-three state energy giants have secured several gas projects abroad, but the seaborne transportation infrastructure has not kept pace.

LNG carriers are complex tank ships able to transport and keep storage of the liquefied fuel in bulk at -163 degree Celsius. At present, South Korea dominates the market for building those ships. Hudong-Zhonghua Shipbuilding (Group) LTD. is so far the only Chinese contractor that is able to construct such complicated vessels at home.

Aiming to beef up its energy security, China is determined to enlarge its fleet of LNG tankers going forward. CSSC Jiangnan Heavy Industry Co. Ltd. (600072.CN), China Shipbuilding Industry Co. Ltd. (601989.CN) and China Rongsheng Heavy Industries Group (01101.HK) are scrambling to ride the demand for the special vessels.

Meanwhile, Beijing is also promoting LNG-powered ships nationwide as part of broader efforts to tackle the worsening air pollution. With more subsidies and policy support, demand for oil-to-gas conversion would be enormous in the years to come. China CSSC Holdings Ltd. (600150.CN) is one of the players that are technically well-prepared to embrace the green refit wave.

– Contact the writer at [email protected]


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