CHINA is making fast inroads into the market for new liquefied natural gas (LNG) tankers as local and foreign ship owners turn to its shipbuilders for the specialty vessels because long dominant yards in South Korea are fully booked.

Three Chinese shipyards —only one of them having experience building large LNG tankers — won nearly 30% of this year’s record orders for 163 new gas carriers, claiming ground in a sector where South Korea usually captures most of the business.

LNG tanker order books for Chinese yards tripled as China’s gas traders and fleet operators sought to secure shipping after freight rates soared to records following the upending of global energy supply flows by the war in Ukraine.

With South Korean shipbuilders swamped by orders to service Qatar’s massive North Field expansion, Chinese yards also attracted more foreign bookings, including first overseas orders for some ship makers only recently certified to build membrane-type LNG carriers.

“As more Chinese gas traders engage local shipyards, they will be forced to climb the learning curve and eventually grow the whole industry,” said Li Yao, founder of Beijing-based consultancy SIA Energy.

Chinese shipyards this year won 45 LNG tanker orders worth an estimated US$9.8 billion, about five times their 2021 order values, according to shipping data provider Clarksons Research.

By late November, Chinese yards had grown their LNG order books to 66 from 21, giving them 21% of global orders worth around US$60 billion.

Comparatively, Chinese shipyards built just 9% of the existing global LNG fleet, according to Clarksons.

Shanghai-based Hudong-Zhonghua Shipbuilding is the only Chinese yard with experience building large LNG carriers, delivering dozens going back to 2008. This year, it took 75% of China’s new orders.

Hudong-Zhonghua shared 26 orders from local owners — versus nine the last two years — with fellow China State Shipbuilding Corp. units, Dalian Shipbuilding Industry and Jiangnan Shipyard (Group), according to Clarksons and industry officials.

Two other yards — China Merchants Heavy Industry (CMHI) and Yangzijiang Shipbuilding — were certified to build large LNG carriers this year and have attracted interest from local and foreign shippers.

LNG tankers, like aircraft carriers, are among the most difficult vessels to build, taking up to 30 months. For membrane-type containment tanks alone, 200 workers spend two months welding barrier walls made of paper-thin steel and 130 km (81 miles) of connecting lines.

Workers on these systems for housing gas chilled to minus 160 Celsius for shipping also have to be certified by Gaztransport & Technigaz, a French engineering firm that holds the patents and licenses its designs to shipbuilders.

“The learning curve will be steeper for the newer builders ... We’ll also face a shortage of skilled workers,” said Hu Keyi, corporate technology chief at Jiangnan Shipyard.

Jiangnan is building its first 80,000-cubic-meter tanker for Guangdong-based trader JOVO Energy and won an order in March from Abu Dhabi National Oil Co. for two LNG carriers.

“Considering relatively low financing costs thanks to Chinese banks’ support, investing in a newbuild offers greater security versus term chartering,” said Jacky Cai, a director at JOVO Energy. (SD-Agencies)