LNG World Shipping November/December 2017 by rivieramaritimemedia

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LNG trade Tellurian rewrites the rules North America’s second-wave LNG exporters – naming the winners and losers

“We foresee the LNG market, based on moderate growth, requiring more than 100 mta of new construction to meet demand by 2025” Tellurian president and chief executive Meg Gentle, page 6

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13 Comment

5 Here comes the second wave of US LNG

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12 7

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Key: numberMeg of ships due tells for survey 6 EXCLUSIVE: Tellurian president and chief executive Gentle LNG World Shipping why the next wave of US LNG exports will match the first – and how Driftwood LNG will set the pace

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18 Although shipyards in Asia continue to gain ground on Merchants those in Europe, China Bank this year’s strongest LCM performer so far is Middle East-based N-KOM Mitsubishi Corporation

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rand total: 71 www.lngworldshipping.com

21 Nakilat is putting a third of its part- and wholly owned fleet into drydock over the next 24 months

Hyundai LNG Shipping Co North West Shelf Shipping

Hoegh LNG Partners

Thenamaris J4 Consortium

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8 Developers in the US and Canada propose dozens of newGolar LNG-export Power projects – but which are the likely winners and losers? Karen Thomas reports

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Key: number of ships due for survey

Grand total: 104

LNG World Shipping | November/December 2017

contents Arctic LCM

November/December 2017

24 EXCLUSIVE: Mitsui OSK has made complex arrangements to repair and maintain three icebreaking LNG carrier newbuildings that will deliver cargoes from Yamal LNG in the Russian Arctic. MOL LNG Transport (Europe) boss Andy Hill tells Karen Thomas his plans

Editor: Karen Thomas t: +44 20 8370 1717 e: karen.thomas@rivieramm.com

Infographic 30 Which shipowners are sending vessels for special survey in the next 12 and 24 months? Our latest infographic gives you all the answers

Statistics 32 Mike Corkhill tracks the LNG tonnage ordered and delivered in September and October 34 Your comprehensive guide to the LNG carriers and floating storage and regasification units (FSRUs) on order and on the water

Viewpoint 40 Melanie Lovatt of Poten & Partners compares floating LNG (FLNG) projects’ financial models Front cover image credit: Exmar Shipmanagement Next issue January-February 2018 issue of LNG World Shipping Main features include analysis on LNG imports and exports in Asia, a special report on offshore and floating LNG, and the latest initiatives in cargo monitoring and control. We also look at how class will assess the new generation of icebreaking LNG carriers Read the latest international LNG shipping news at www.lngworldshipping.com

Consultant Editor: Mike Corkhill t: +44 1825 764 817 Brand Manager: Ian Pow t: +44 20 8370 7011 e: ian.pow@rivieramm.com Production Manager: Richard Neighbour t: +44 20 8370 7013 e: richard.neighbour@rivieramm.com Subscriptions: Sally Church t: +44 20 8370 7018 e: sally.church@rivieramm.com Chairman: John Labdon Managing Director: Steve Labdon Finance Director: Cathy Labdon Operations Director: Graham Harman Head of Content: Edwin Lampert Executive Editor: Paul Gunton Head of Production: Hamish Dickie Business Development Manager: Steve Edwards Published by: Riviera Maritime Media Ltd Mitre House 66 Abbey Road Enfield EN1 2QN UK

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COMMENT | 5

Here comes the second wave of US LNG

y the end of this year, at least one new US export project will join Cheniere-led Sabine Pass, handling its first LNG cargoes. Dominion Energy is planning to ship its commissioning cargoes at the 5.25M tonne a year (mta) Cove Point LNG project in Chesapeake Bay by year-end. All cargoes from the US$3.8Bn Maryland project are contracted to Sumitomo and Tokyo Gas of Japan and to GAIL of India. Next year, will bring a lull – although Sabine Pass is due to start production on its fourth 4.5 mta train, and could reach a final investment decision on its sixth train. However, plans to start production at two projects, Elba Island LNG and Cameron LNG, have now been delayed to 2019. Things will get busy, then, in the US, with production due to start at Kinder Morgan-led Elba Island LNG in Georgia, at Sempra-led Cameron LNG in Louisiana, and in Texas at Cheniere-backed Corpus Christi LNG and at CB&I’s Freeport LNG project. By the end of the decade, these six confirmed US LNG-export projects will bring nearly 65M tonnes of LNG to market. Delays to projects have already had a knock-on effect on vessel deliveries this year, as Mike Corkhill notes on page 32 of

Karen Thomas, Editor

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this issue. By mid-October, 2017 was turning out to be yet another sluggish year for fresh LNG-carrier orders. Sixteen vessels had been ordered by October. No LNG carriers have been ordered since August. But Hyundai Heavy Industries has landed two separate orders, since August, for newbuilding floating storage and regasification units (FSRUs). Cheap, plentiful gas, driving import demand, and delays to new projects explain why FSRUs make up at least a quarter of the newbuilding orders placed this year up to October. New export projects in Australia and the start of three trains at Sabine Pass in the US have created an LNG-supply glut. Russia’s Yamal LNG project, due to handle its commissioning cargoes in November and to start production next year, will only add to that short-term glut.

Shortages

Nevertheless, the smart money expects feast to switch to famine for LNG supply – and within a decade. Industry-watchers predict that the US will lead a new wave of export projects, from 2022 to the end of the decade. Donald Trump’s administration plans to cut red tape and to speed up approvals for

small-scale LNG exports, in particular. US energy secretary Rick Perry has vowed “to unleash American energy”. And so – as Tellurian boss Meg Gentle tells us exclusively on page six – a new wave of US LNG-export plans is already under way. Tellurian hopes to reach a final investment decision by mid-2018 on Driftwood LNG, its 26 mta project in Louisiana. Driftwood LNG is just one of dozens of proposed North American LNG-export projects that have reached different stages of progress. Our area report on page eight profiles 15 of the best-known proposals – two in Canada, the rest in the US – and weighs up their strengths and weaknesses. The challenge for analysts, prospective investors and shipowners is to work out which of the many, many proposed LNGexport projects have strong business plans and buyer relationships, and which are long on ambition, short on strategy. But what is now beyond question is that more projects will come. Ms Gentle expects global demand to support 100 million tonnes of new liquefaction capacity as early as 2025. And she predicts that the second wave of US LNG projects will be every bit as big as the first. LNG

Please click here for more editors comment videos LNG World Shipping | November/December 2017

6 | INTERVIEW

‘THE SECOND WAVE OF US LNG EXPORTS WILL BE AS BIG AS THE FIRST’ Few LNG-export proposals have reached a final investment decision this year, yet Tellurian president and chief executive Meg Gentle tells Karen Thomas why she is pressing ahead with new US export project, Driftwood LNG What stage have you reached with your export plans for Driftwood LNG? Driftwood LNG is on Louisiana’s Calcasieu River, with liquefaction capacity for 26M tonnes a year (mta). We are working on the project designs with Bechtel, GE and Chart Industries. We have almost completed the engineering, procurement and construction contract and we completed the front-end engineering and design (FEED) in June. We have calculated the cost of the plant at US$500-600/ tonne, although we won’t know the final EPC costs until that contract is signed. We will execute the EPC agreement within the next month. We have been working with the Federal Energy Regulatory Commission (FERC) and expect to complete the application process in H1 2018. That will allow us to start construction mid-year 2018. We are still on schedule – and it’s very important to maintain that schedule and to stay on-budget.

Will Driftwood LNG lead a so-called second wave of US LNG-export projects? I believe we are at the start of a second wave of export projects. The first wave has almost 70 mta of liquefaction capacity under

construction. We foresee the LNG market, based on moderate growth, requiring more than 100 mta of new construction to meet demand by 2025. Between 60% and 70% of that will come from the US. The second wave will be very important – and we see it being as big as the first.

How many cargoes will Total buy from Driftwood LNG? Total holds 23% of our equity, as a common shareholder. We took Tellurian public in February, trading on Nasdaq. We’ve almost tripled Total’s investment. However, Total did not sign any agreements as a customer; it signed up as a partner.

How many Driftwood LNG cargoes have you contracted? Most of our enquiries are from big buyers of LNG, wanting to become partners in the project. This is the traditional structure for developing LNG plants. The customers are the partners in the project itself. We will take the first half of next year to firm up our commercial model, to take a final investment decision and start construction in mid-2018. We have not sold any LNG to date. The market is becoming much more liquid. The LNG

LNG World Shipping | November/December 2017

Meg Gentle: “we are at the start of a second wave of export projects”

www.lngworldshipping.com

INTERVIEW | 7

market is the second-largest gas market in the world after the North American pipeline gas market. People are trading LNG on various indices. Every day, some 300 LNG cargoes are moving around the world. Any buyer can call the sellers or the trading houses to divert a cargo from its original route. Not so many contracts are needed now.

Analysts expected most Sabine Pass cargoes to go to Europe. So far, that prediction has been incorrect. Where will Driftwood LNG cargoes end up? Sabine Pass cargoes were fixed against long-term contracts but the buyers have retraded that LNG, optimising it to send to different markets. That’s a really good example of the increased liquidity in the market. Driftwood’s LNG will go everywhere – to Europe, which has a transportation advantage for US gas, and to Asia, which is 75% of the LNG market and is often willing to pay a premium. But the Middle East is also a rapidly growing market that was not buying LNG five years ago. And some cargoes will go to South and Central America, for switching power generation to gas.

Is it also hard to predict what lies ahead because the markets are so volatile? This is why we are working to ensure our business model offers the lowest costs. We know we will deliver competitive LNG to all these markets. We have expertise building liquefaction capacity at low cost. To construct a plant at US$550/tonne, we will deliver next-generation liquefaction capacity. We’ve also secured our own low-cost gas supply, buying natural gas-producing assets and land at Haynesville in Louisiana for US$85.1M. There’s a little production there now, of some 4 mcf/d but it has

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an expected resource of some 1.3 tcf at 140 drilling locations. We can produce that gas and deliver it to market for US$2.25 per mBtu. Before return on capital, we will have about US$0.75/mBtu of operating expense and fuel usage at the liquefaction plant. So we can deliver gas to the US Gulf for US$3/mBtu.

Was it the plan, all along, to invest upstream? We were working with that possibility – we had to have lowcost supply. We had to, as far as possible, know the cost of our own supply and not be subject to volatility in the US market. We planned a couple of things to build the supply portfolio. First, we designed the Driftwood pipeline to connect with around 35 bcf/d of flowing gas. We will buy around 4 bcf/d when the plant is at full capacity. We’ve also been talking to producers in the US about buying gas directly from them in the field. The third point was purchasing the reserves and developing the gas ourselves. We’ve spent most of the last year working out whether we have the capability to buy and to operate. In May, we hired a reservoir exploration team. This acquisition is the first step in building a portfolio of gas supply.

We are looking for reserves of 15 tcf. That’s our goal.

Tellurian announced at Gastech this year that it would offer buyers cargoes priced at US$8/ mBtu for 7 mta under eight-year contract. Does that offer still stand? The US$8 offering is from 2023-2028 for cargoes fixed to Tokyo. That offering still stands, based on expectations that we know our costs of production. That’s still a model for those who want to buy on a fixed-cost basis. Purchasing the reserves makes that possible.

How important now is it to sign that all-important first supply contract? If LNG buyers want contracts, we are very well positioned to be flexible, to meet their needs. But our model means that contracts aren’t necessary for us to move forward. That puts us in position to start construction once the permitting process is completed and the EPC contracts are ready.

How many ships will Driftwood LNG need to bring its cargoes to market? If it takes two ships per million tonnes and we export 26 mta, that’s roughly 50

Driftwood LNG, the background

vessels. But if we’re saying that global demand will require an additional 100M tonnes of liquefaction capacity, that’s 200 LNG-carrier newbuildings. Do shipowners have the appetite to order that tonnage on spec? We believe that a few shipowners will continue to maintain a few vessels on spec. But we don’t expect large numbers of newbuilding vessel orders until new liquefaction projects reach final investment decision. It takes two years to deliver a new ship, four or five years to deliver a new liquefaction plant.

How far is Tellurian planning to venture downstream, perhaps as an investor in new LNGimport markets? We have expertise in project development – we are enthusiastic about supporting new regasification capacity, particularly where that helps to expand demand. The floating storage and regasification unit (FSRU) market has been incredible in opening new markets and supporting low-cost, 600 MW power plants that can come online within two years. We would be open to investing in regas projects that help us to grow our markets and support US LNG growth.

How far down that road have you come?

Cheniere founder Charif Souki formed Tellurian Investments early last year, having resigned from the board of the company that launched Sabine Pass and Corpus Christi LNG, having fallen out with activist investor Carl Icahn over how quickly to expand. Mr Souki and ex-BG director Martin Houston announced immediately that Tellurian would develop a US$6-8Bn LNGexport project on Louisiana’s Calcasieu River, to meet mid- to long-term gas demand. Former Cheniere executive vicepresident Meg Gentle jumped ship to join Tellurian in August. In November, GE Oil and Gas invested US$25M in Tellurian. In December, French energy firm Total took a US$207M position. Driftwood LNG has permits to export to countries that have a free-trade agreement with the US. It is waiting for approval from FERC.

We are looking at projects. We don’t have any active investments. Around 150M tonnes of FSRU projects are being proposed around the world. The fact that it’s tied to demand – that’s really interesting.

Things seem to have moved quickly this year for Tellurian and for Driftwood LNG; are you on the home stretch? I’d like to think we’re on the home stretch, yes. As we say in the States, we’re on the 10-yard line. LNG

LNG World Shipping | November/December 2017

8 | AREA REPORT

PREDICTING NORTH AMERICA’S SECOND WAVE OF LNG-EXPORT PROJECTS After an uncertain start, Donald Trump’s administration looks set to ramp up US exports. The US Department of Energy (DoE) is planning to speed up approvals for small-scale LNG exports to non-free trade agreement (FTA) countries in Latin America and the Caribbean. Energy secretary Rick Perry has pledged “to unleash American energy”, despite an oversupply of LNG that looks set to stretch into the 2020s. Here, LNG World Shipping weighs up the strengths and weaknesses of the proposed second wave of LNG-export projects and looks at how the first wave is shaping up

PROPOSED NORTH AMERICAN LNG-EXPORT PROJECTS New wave, 2020-2025

Calcasieu Pass, Louisiana, US

2022. The DoE has approved shipments to FTA countries. Outlook: a dark horse. Where will it find takers?

Delfin LNG, Louisiana, US

Start date: TBC Volumes: 10 mta

Start date: 2021-2022 Volumes: 13 mta

Michael Sabel-led Venture Global LNG plans to export 10 mta from Calcasieu Pass and up to 20 mta from Plaquemines LNG, also in Louisiana. A midscale LNG production project, Calcasieu Pass will comprise up to nine 1.2 mta liquefaction blocks and a jetty for LNG carriers up to 185,000 m3. In July, Venture Global headhunted former Total vice-president development Tom Earl as chief commercial officer.

Delfin Midstream is positioning its Cameron Parish, Louisiana project as the first floating LNG (FLNG) scheme in the

Americas. This year, it signed a deal with shipowner Golar LNG to supply FLNG expertise. Golar is becoming a midstream LNG player, taking equity stakes in floating production projects and supplying them with converted vessels. Golar plans up to four FLNG vessels to deliver “the lowest-cost liquefaction solution in North America”, producing around 3 mta apiece. The partners aim to reach FID on Delfin LNG next year.

Outlook: the pace of progress will reflect the success – or otherwise – of Golar’s first two FLNG projects off West Africa.

Driftwood LNG, Louisiana, US Start date: 2022 Volumes: 26 mta Backer Tellurian Investments aims to finalise sales and purchase agreements for Louisiana-based Driftwood LNG. Tellurian is led by

Outlook: no word yet on offtake deals, a final investment decision or construction contracts.

Commonwealth LNG, Louisiana, US Start date: 2022 Volumes: 9 mta FERC has accepted the final application from Paul Varelloled Commonwealth LNG. The project aims to reach an FID in Q2 2019 and to start construction by the end of that year, starting commercial operations in Q2

LNG World Shipping | November/December 2017

Georgia’s mid-scale Elba Island project has contracted its 2.5 mta output to Shell

www.lngworldshipping.com

AREA REPORT | 9

Cheniere founder Charif Souki. He says Driftwood LNG will shatter a business model based on long-term, fixed-rate contracts. Driftwood LNG will offer cargoes at US$8/ mBtu “for an initial 7 mta for contracts of up to eight years, from 2023”, he told Gastech in April.

backers, this Port Fourchonlike project still has ground to make up.

Outlook: Souki quit Cheniere because his bullish perspective clashed with the energy company’s bearish demand expectations. Team Tellurian has experience and a point to prove.

Jefferson County-based Golden Pass has powerful backers in energy giants Qatar Petroleum, ConocoPhillips and ExxonMobil. This US$10Bn project is the cornerstone of Qatar’s plan to build a global LNG portfolio, split between domestic and international production. FERC approved the Golden Pass Products venture in January.

Outlook: Jordan Cove should become the first LNG-export project on the US west coast. The question is, how soon?

Start date: on hold Volumes: 16.45 mta/24 mta

Outlook: an FID may be some way off.

Outlook: this project may lead the pack, given its energy industry backing and strategic importance.

Shell is focusing on cutting costs as it absorbs BG's business. It has halted new LNG FIDs. When that changes, it plans to reach FID on Sakhalin III in eastern Russia first. North America export projects Lake Charles LNG and LNG Canada have slipped down Shell’s list of priorities.

Monkey Island LNG, Louisiana, US

Fourchon LNG, Louisiana, US Start date: 2022 Volumes: 5 mta Fourchon LNG plans to export up to 5 mta from Port Fourchon, near Belle Pass in Louisiana, completing the US$888M project in two phases, starting at 2 mta. Owner Energy World is seeking offtake agreements in Asia, but will reserve 500,000 tonnes a year for domestic use, providing LNG as marine fuel to offshore supply vessels in the Gulf of Mexico via a dedicated berth loading LNG onto carriers of size 180,000 m3. This could position Port Fourchon as an LNG supply hub serving the Caribbean. It hopes to start construction late in 2019. Outlook: a sophisticated business plan positions Port Fourchon as a hub for LNG-fuelled vessels for the Americas.

Golden Pass LNG, Texas, US Start date: TBC Volumes: 15.6 mta

Jordan Cove, Oregon, US Start date: 2024 Volumes: 7.8 mta Veresen-backed Jordan Cove LNG is gathering momentum. In July, it awarded the EPC contract to KBJ – a joint venture between Kiewit Energy, Black &

Veatch Construction and JGC US Projects. It also announced that the deepwater terminal at Coos Bay on the US west coast will use B&V’s Prico technology. Expect the US$10Bn project to reach an FID in 2019, if discussions with prospective offtakers go to plan.

Lake Charles LNG, Louisiana, US LNG Canada, British Columbia, Canada

Outlook: expect a much tighter market before Shell fires up these two projects.

Magnolia LNG, Louisiana, US Start date: TBC Volumes: 8 mta LNG Ltd-backed Magnolia LNG is a midscale project based at Lake Charles in Louisiana, comprising four trains producing up to 2 mta each. It has a 20-year agreement to source feed gas using the Kinder Morgan Louisiana pipeline. Meridian LNG has agreed capacity rights for up to 2 mta, but Magnolia needs additional 20-year offtake agreements to reach an FID.

Start date: 2022 Volumes: 15.75 mta Southern California Telephone Co subsidiary Monkey Island LNG hopes to reach an FID on its Cameron Parish project in Louisiana by year-end 2020. The company has agreed a 20-year, fixed-price agreement to source natural gas and has

Shell has put the Lake Charles LNG project on hold. Credit: BG

G2 LNG, Louisiana, US Start date: TBC Volumes: 15.4 mta Backed by a former state governor, this US$11Bn project is Louisiana’s fourth-largest capital investment scheme. FERC terminated its application for permits earlier this year, after G2 scaled up its proposal, adding 200 hectares and plans for small-scale exports to Latin America and the Caribbean. G2 intends to apply again. Outlook: despite powerful

www.lngworldshipping.com

LNG World Shipping | November/December 2017

10 | AREA REPORT

secured export approval to ship LNG to FTA countries. The proposed project comprises three trains of 4 mta each. Monkey Island LNG claims to have agreements for a third of its output, from interests including China-based terminal owner the Jovo Group.

hinted that Kogas may also take an equity stake.

Outlook: China presents an intriguing angle for the second wave of US export projects. China didn’t back or buy from the first wave.

Start date: 2020 Volumes: 27 mta

Port Arthur LNG, Texas, US Start date: TBC Volumes: 13.5 mta The FERC has approved LNG exports from Port Arthur LNG to FTA countries. Owners Sempra Energy and Woodside Petroleum signed a non-binding memorandum of understanding this year with LNG buyer Kogas for this Texas-based project. Sempra

NORTH AMERICAN LNGEXPORT PROJECTS UNDER CONSTRUCTION First wave, 2017-2019

Sabine Pass LNG, Louisiana, US Start date: February 2017-2019 Volumes: 24 mta As the first LNG-export project off the blocks in the lower 48 states of the US, Sabine Pass has blazed a trail for its rivals, completing its first four of six construction phases in record time. Owner Cheniere will complete the project’s fourth 4.5 mta train by year-end. Train three started production in March and the fifth is under construction. Cheniere has contracted six deals, covering 19.75 mta from trains one to five. It has not yet reached an FID on number six. By the end of July, Sabine Pass had loaded more than 160 cargoes.

Outlook: analysts tip Woodside to press ahead with mid-term LNG projects. Buy-in from Kogas could clinch this deal.

Rio Grande LNG, Texas, US Lake Charles LNG has slipped down Shell’s list of priorities

Texas-based NextDecade claims to have contracted nonbinding sales agreements for 30 mta with buyers in Asia and Europe. One prospective taker is Ireland, where Kathleen Eisbrenner-led NextDecade is working on an LNG-import project with John Frederiksenbacked Flex LNG and the port of Cork. Innisfree LNG aims to position a floating storage and regasification unit (FSRU) in Ireland’s southern port. In September, the US$20Bn Rio Grande project at Brownsville in Texas won approval from the

US DoE to export to FTA countries. Outlook: NextDecade has a powerful shipping partner that can help prospective buyers with their import infrastructure.

Woodfibre LNG, British Columbia, Canada Start date: 2020 Volumes: 2.1 mta Singapore-based RGE has had protracted discussions over its

Cameron LNG, Louisiana, US

Elba Island LNG, Georgia, US

Start date: 2019 Volumes: 15 mta In August, Sempra announced that it will delay the start date of Cameron LNG to 2019. Sempra LNG & Midstream owns the three-train, US$10Bn project with Mitsubishi/NYK Lines joint venture Japan LNG and Engie.

Start date: 2019 Volumes: 2.5 mta

Cove Point, Maryland, US Start date: commissioning cargoes by year-end Volumes: 5.25 mta Dominion Energy expects the US$3.8Bn Cove Point LNG project to start production in the new year, on schedule. All cargoes from the Marylandbased project are contracted under 20-year supply deals to an affiliate of India-based GAIL and to Japan’s Sumitomo and Tokyo Gas.

LNG World Shipping | November/December 2017

Construction started a year ago on Elba Island, Georgia, a project that aims to start production in 2019. In March, infrastructure giant Kinder Morgan sold its 49% stake in Elba Liquefaction Co to investment funds managed by EIG Global Energy Partners, forming a joint venture to drive the US$1.3Bn project. Elba Island has contracted its entire output to Shell.

Corpus Christi LNG, Texas, US Start date: 2019 Volumes: 22.5 mta Cheniere-backed Corpus Christi LNG is due to launch its first 4.5 mta train in 2019 and its second in 2020.

British Columbia LNG-export project. In July it won approval for revised designs for the project. Now that Shell has halted LNG Canada, above, and Petronas axed its US$32Bn, 12.8 mta Pacific Northwest project, Woodfibre LNG should become Canada’s first live LNG-export project. However, it announced in October that it may not start construction in early 2018. Outlook: Woodfibre will pioneer Canadian exports. A lot stands or falls on this project’s success.

Cheniere plans up to five trains, but has yet to reach an FID on number three. However, its first two trains are fully contracted to buyers including Pertamina, Gas Natural Fenosa, Endesa, Iberdrola, Woodside, EDF and Portuguese energy firm EDP.

Freeport LNG, Texas, US Start date: 2019 Volumes: 13.2 mta Freeport LNG Development partners CB&I, Zachry and Chiyoda are investing some US$14Bn in this three-train project at Quintana Island. They have also applied to the FERC to build a fourth train to produce 5.1 mta. Freeport LNG has contracted 13.4 mta under use-or-pay liquefaction tolling agreements with Japan-based JERA, Osaka Gas and Toshiba, with BP Energy and with SK E&S LNG of South Korea. LNG

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SHIPMANAGEMENT | 13

Tales of the unexpected

– simulators create a safe space for LNG training Shipmanagers and training providers are expanding their simulator-based LNG-handling courses as LNG carriers and offshore projects call out for more LNG-qualified seafarers and as general demand grows for crew trained to handle LNG as marine fuel

orse things happen at sea, according to the old naval adage. But the good news is, very few bad things are completely unforeseen. Training and preparation ensure that crew react quickly and efficiently to difficult or unexpected events – and that’s where simulators come in. Bernhard Schulte Shipmanagement (BSM) has invested heavily in India-based simulator training. Maritime Training Centre director Brijendra Srivastava is supervising around 10 LNG training courses a year around the world, for BSM and for third parties such as Flex LNG, Nakilat and Thenamaris, using LICOS and LCH simulation. Mr Srivastava has seen strong demand this year for LNG membrane simulator training, as most recent deliveries feature GTT Mark III or No 96 membrane containment systems. A five-day simulator course will generally cover the complete drydock-to-drydock cycle, he said.

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“It follows the initial familiarisation of the simulator, inerting the vessel, gassing up, cooling down, loading, topping up the tanks, loaded passage, discharging, stripping or heel-out, warming up the tanks, leak detection, then back to drydock,” he saai. “This risk-free training is the major advantage of using simulators. Our LICOS simulators enable the instructor to cause apparent equipment failures during all stages of operations to teach the trainees how to react in unexpected and unusual situations, including cases they may never experience in real life.” BSM plans to launch in-house IGF Code courses, basic and advanced, to meet slow but steady growth in the LNG-fuelled non-LNG-carrier fleet. This will incorporate Standards of Training Certification and Watchkeeping for Seafarers (STCW) and Society of Gas as Marine Fuel competencies for commercial ships that need gas-trained

Simulators offer a safe space to tackle dangerous scenarios at sea (Credit: Exmar)

engineering officers and crew. Next up, it will develop simulator training for dual-fuel, diesel-electric propulsion systems to meet the terms of the IGF Code and of the 2020 sulphur cap. “A lot of new LNG membrane ships are being delivered,” Mr Srivastava concluded. “Vessels operating engines with LNG as a fuel have a variety of fuel-tank types and are becoming more common as companies realise the drawbacks of exhaust gas scrubbers and face the reality that the shipping industry will not be allowed to consume high-sulphur fuel after 2020. “Further, as the need for low-sulphur fuels continues, BSM is developing a gas-supply vessel to provide bunkering for ships with LNG as a fuel. This will also require specialist training for our crew.” BSM’s solution? It will upgrade its LNG simulators to develop new training modules, launching a dedicated training school on board its LNG newbuilding for

LNG World Shipping | November/December 2017

14 | SHIPMANAGEMENT

trainees to complete the STCW advanced course, the Society of International Gas Tanker and Terminal Operators (SIGTTO) advanced competency syllabus and the LICOS simulator while they get to grips with operating this new type of ship. The new STCW requirements on handling LNG and other low-flashpoint fuels that have taken effect this year are driving growth in interest in specialist simulator training. Norway-based Kongsberg Digital reports growing demand for simulator training to handle LNG as marine fuel. Product manager maritime simulation Leif Pentti Halvorsen has delivered LNG cargo-handling models to customers in Indonesia, the Philippines, South Korea, the US and Canada so far this year. Kongsberg offers maritime LNG training to IMO and SIGTTO standards. Simulators create a safe space to expose trainees to events that – in real life – would be dangerous or costly. “The LNG cargo-handling simulators are designed to train for the handling of cargoes with extreme temperatures that may easily damage tanks or the hull structure of the ship, by the cargo boiling off too fast, creating over-pressure, or if a tank is cooled down too fast, creating a vacuum,” Mr Halvorsen said. “The simulator is a tool to practice how to be in control at all times, to prevent ventilation to atmosphere, resulting in loss of cargo… At the very start of loading and discharging, this can be a challenge.” Kongsberg’s simulators allow trainees to practise lining up for loading and ballast-

handling simultaneously, checking the atmosphere, controlling the flow into each cargo tank, monitoring the trim or list of the ship and controlling the atmospheric pressure and temperature throughout the operation. Other packages focus on handling inert tanks after docking, cool-down before loading by using spray systems and venting inert tanks for inspection or docking. Kongsberg is shaping future training to meet demand from ferry and cruiseship owners investing in LNG as marine fuel. “Also coming up is the need for understanding and operation of two-stroke engines using gas as fuel,” Mr Halvorsen says. Kongsberg is working to ensure that its simulators cover all possible LNG carrier designs, configurations, engine and control equipment, as well as all the major training scenarios. Earlier this year, it launched a dual-fuel LNG model for cruiseships and ferries for the K-Sim engine simulator. The package covers the main training requirements for a 55,000 gt, 218 m cruise ferry fitted with Wärtsilä’s 8L50-DF medium-speed, fourstroke dual-fuel engines that generate power to a high-voltage switchboard. So far, the package is available in the Netherlands, Finland, Sweden, Canada, Denmark and Taiwan. In Scotland, Glasgow-based Stream Marine Training (SMT) has teamed up with Belgium-based CryoAdvise and industrial gas supplier BOC to develop Scotland’s first specialist LNG training course. The course aims to drive safety standards for LNG operations. SMT’s course, which includes cryogenic testing, launched

Leif Pentti Halvorsen: the simulator is a tool to practice how to be in control at all times

Brijendra Srivastava: simulators offer risk-free training

LNG World Shipping | November/December 2017

with Caledonian Maritime, which has ordered two dual-fuel ferries, to be built by Ferguson Marine on the River Clyde. SMT is delivering the course monthly, but can also offer it on demand. The course introduces LNG and the drivers for using it as a fuel. It covers the properties, ecology, hazards, regulations and economic facts associated with LNG. By this autumn, SMT had trained 150 people. It hopes to train up to 1,000 in the medium term, and is developing a specialist simulator programme for crew working on LNG-fuelled ferries, modelled on the cargo containment and cargotransfer systems of Viking Grace. SMT runs some 30 accredited courses for more than 100 clients, including Disney Cruises, Caledonian MacBrayne and P&O Ferries. Scotland is positioning itself as a North Sea LNG bunkering and smallscale distribution hub. BSM, ExxonMobil, Babcock International and Calor Gas have launched Caledonia LNG, an Orkneybased venture. And shipowner Stolt-Nielsen may base one of the two 7,500 m³ LNG bunker-supply ships it has ordered from Keppel Singmarine at the Port of Rosyth. Stolt-Nielsen is working with UK LNG importer Flogas to develop Rosyth as a distribution hub. Reflecting this flurry of interest in LNG, Glasgow Maritime Academy is also developing courses for non-LNG crew to handle gas as marine fuel. In Spain, Siport 21 has expanded training at its Real-time Ship Simulation Centre to meet growing demand for LNG safety training for floating regasification and storage units, notably at Argentina’s Bahia Blanca and Escobar LNG terminals and at Port Qasim in Pakistan. The simulation facility has trained more than 1,100 seafarers on a programme approved by DNV GL. Siport has also stepped up its training for masters, officers and pilots relating to ship manoeuvres and emergencies. Simulator centre clients include BG, BW Fleet Management, Höegh LNG, BP, Stena, Knutsen, Exmar Shipmanagement, Gaslog, Golar LNG, Dynagas, Nakilat, K Line, Mitsui OSK LNG, NYK LNG, Shell, Teekay and Thenamaris LNG. Siport 21 was founded in 1999. Siport 21 carries out technical studies for clients in Spain and overseas. It has trained pilots based at ports all over the world and tug masters from firms including SAAM, Svitzer, Reyser, Tramarsa, Intertug, Coltugs, Coremar and Spilbun-Both. LNG

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EQUIPMENT | 17

Houlder, Wärtsilä, Trelleborg and KLAW take the jetty to the ship A new design concept aims to cut the costs and speed to market of small to mid-scale LNG imports, exports and bunker supply services

K-based engineering and design firm Houlder has designed a no-jetty concept for LNG transfers and bunkering for small to mid-scale import projects where having a fixed jetty would be impractical, expensive or harmful to the environment. Houlder’s floating transfer terminal (FTT) is a compact barge that uses an LNG-transfer system developed with KLAW LNG to connect to a carrier. It also employs Trelleborg Cryoline cryogenic floating hoses to connect to shore. Demand for LNG is growing in coastal communities around the world, and particularly in island nations such as Indonesia and the Caribbean states. However, these countries may struggle to build shore-based terminals, due to high land prices, constraints on space, shortage of funds or ecological sensitivities. Houlder worked with Trelleborg and Wärtsilä to develop the FTT as a cost-effective solution to these constraints. The system supports imports, exports and bunker-supply needs, transferring cargo between ships moored up to 800 m off shore and land-based units. It requires no major civil works and, when the contract ends, the units can move to other locations. The FTT barge is a simple, efficient steel or concrete structure, with its own propulsion and space on deck to operate the LNG equipment safely. Houlder can tailor the designs to detailed engineering specifications, local building capabilities and client preference and can scale up or down with hose sizes between 6 in and 20 in, a range with a corresponding transfer rate of 1,000 m3/hr-5,000 m3/hr. Trelleborg’s Cryoline floating hoses will transfer LNG and boiloff gas between shore and barge. The hoses bolt together in 12 m sections in the required string length, to transfer LNG offshore safely, minimising boil-off rates. Houlder says the hoses combine flexibility, reliability and a long service life and deliver what the client needs, in terms of safety, flow-rate and operating requirements. Houlder worked with KLAW to develop the Khobra transfer systems that deliver the LNG between vessels in a safe, controlled way. Khobra comprises a deployment crane, a motioncompensated deployable emergency-release system (ERS) manifold and a gas system. Its features include: • A standard marine knuckle-boom crane.

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• Flexible LNG transfer and/or vapour-return lines, both 4 in. and 8 in. • Active ERS and shut-down systems. • Quick connection and disconnection. • Ease of alignment to different manifold arrangements. • Monitoring of vessel motion and compensation for it, including the use of a limit-detection system. • A secure landing frame to transfer loads. • Proven gas-handling components. Houlder says the FTT concept also minimises the number of crew required for transfers and LNG-bunkering. The concept has a lead time of 12-18 months, based on local steel or concrete fabrication. Project manager Gianpaolo Benedetti estimated that the capital costs are 30%-50% less than those for a land-based jetty. “The FTT is a flexible, quickly deployable solution that, thanks to a low-draught barge and floating hoses, can operate in the widest range of locations, at a fraction of the cost of fixed infrastructure,” said Houlder director ship design and engineering Jonathan Strachan. “Houlder and partners are discussing a range of applications in the Americas and Asia.” Houlder is promoting LNG as marine fuel as a cornerstone of its business-development plan. In February, Houlder signed a memorandum of understanding with KLAW to develop bunker and transfer solutions for small to mid-sized LNG projects. The company has restructured and, in September, appointed former Rigmar chief operating officer Neil Ferguson as director of LNG storage and distribution to drive Houlder’s end-to-end LNG projects. LNG

Gianpaolo Benedetti: FTT capital costs are 30-50% lower than for land-based jetties

Jonathan Strachan: discussing applications in the Americas and Asia

LNG World Shipping | November/December 2017

18 | LIFECYCLE MAINTENANCE

BUSY TIMES FOR ASIAN YARDS AS LCM DEMAND FLUCTUATES IN EUROPE

NG World Shipping’s annual research into lifecycle maintenance (LCM) demand reveals the usual picture of strong demand in Asia and belt-tightening in Europe amid a general eastward shift. That movement may slow next year, when up to three US export projects ship their first cargoes. Atlantic Basin yards have long held out for an upturn in opportunistic repair contracts once US exports gather pace. Singapore-based Keppel Shipyard was the busiest player in LCM work last year, completing an impressive 30 contracts. By September this year, it had handled 13 LNG-carrier repairs. Compatriots Sembcorp Marine (Sembmarine) and Keppel are locked in a long-term battle to secure most LCM contracts. Sembmarine led in 2015, with 34 repairs against Keppel’s 27. Last year, Sembmarine completed 18 contracts. By September this year, it had handled 15 LCM contracts. Both Singapore yards are making bullish predictions about additional LNG carrier repair contracts to year-end. “With further jobs secured for second-half 2017, we are on track to surpass the total number of LNG vessels we serviced last year,” a Sembmarine spokesman says. However, the busiest shipyard so far this year is not in Asia, but in the Middle East. As of September, Qatar-based NakilatKeppel Offshore & Marine (N-KOM) had repaired 16 LNG carriers – just one more than Sembmarine. And N-KOM is gearing up for a busy two years, as our feature overleaf shows. Qatari shipowner Nakilat is putting a third of its fleet into drydock in the next two years, all of them at the N-KOM shipyard in Ras Laffan. Two other Middle East shipyards that pitch for LNG carrier LCM contracts, Dubai Drydocks and Oman Drydock Co,

LNG World Shipping | November/December 2017

Keppel was the busiest LNG LCM shipyard in 2016

declined repeated requests for data for our survey. In Europe, Spain’s Navantia has reported slowing LNG LCM demand, having handled seven LNG and three LPG contracts to September. The state-owned company carried out 16 LNG repairs and maintenance contracts last year. However, France-based Damen Brest has gained LNG LCM business, landing four contracts by September this year – having handled no LNG LCM work last year. Navantia is more hopeful, looking ahead to year-end. “The second half, especially the fourth quarter, looks much brighter, with three LNG dockings confirmed and much more commercial activity in the market,” a spokesman said. The ships drydocked at Navantia in the first half of this year are BP Shipping’s 155,000 m³ British Emerald and 138,000 m³

British Trader, now renamed British Merchant, BW’s BW Boston, K Line’s 147,608 m³ Celestine River, GasLog’s Methane Nile Eagle, Teekay LNG’s 137,814 m³ Hispania Spirit and the Hyproc Shipping-owned 75,500 m³ LNG carrier Cheikh El Mokrani. One notable contract was a major refit on board the Engie-chartered, BW-owned, 138,059 m³ BW Boston as it underwent scheduled maintenance at the Navantia shipyard in Ferrol, northern Spain. The 2003-built, steam turbinepowered LNG carrier completed a bowsto-stern makeover, replacing its electrical systems, refitting the engines, cargo containment systems, the boiler systems and the bridge systems. BW awarded the electrical refit – which stretched to 4,000 m of new cables – to Kongsberg. Samson fitted the vessel with

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LIFECYCLE MAINTENANCE | 19

new mooring systems, using HPME ropes in a formation that enables BW Boston to transit the expanded Panama Canal. The refit involved 30 crew, 30 subcontractors and up to 100 shipyard and support staff. Most scheduled refits cost some US$4Bn-6Bn. Engie and BW confirmed that the BW Boston refit “cost significantly more than a standard scheduled refurbishment”. Engie commissioned a second major refit for another chartered LNG carrier, this time at Damen Shiprepair Brest (DSBr). Engie and operator Mitsui OSK LNG Transport (Europe) chose DSBr to complete maintenance on board the 2010built, 155,000 m³ GDF Suez Point Fortin while it was gassed-up. The contract of works included a full in-water survey by divers, replacing wire mooring cables with rope, replacing a radar dome and completing a full class survey on the main boilers. DSBr had to prepare extensively for the constraints that come with working on a gassed-up LNG carrier, seeking permits and approvals. However, GDF Suez Point Fortin was back in service and fully operational after two weeks of works. Other contracts this year include a renewal survey maintenance programme on Engie’s 2007-built, 154,500 m³ Gaselys. DSBr also worked on that vessel’s 2006built sistership Provalys. It previously worked on two midsize LNG carriers: Engie’s 2004-built, 74,130 m³ Global Energy and Gazocean’s 39,000 m³ Tellier. In Singapore, Keppel Shipyard has invested heavily in upgrading its repair capability for LNG carriers and LPG vessels, including nearly S$500,000 (US$370,400) in setting up a second

Navantia handled seven LNG and three LPG contracts to September

cleanroom at its shipyard in Benoi. This has doubled Keppel’s capacity, enabling the yard to handle four LNG/LPG vessels’ cryogenic pumps and valves at a time. Keppel has a third cleanroom at its shipyard at Tuas. Recent projects of note include Keppel’s intermediate survey and docking in September of LNG Venus, the first of the two Sayaendo LNG carriers built for Mitsui OSK and Osaka Gas. “The Sayaendo LNG carriers were developed based on increasing demand for LNG and on environmental considerations, and against the background of the shale gas revolution in the US,” a Keppel spokesman said.

“The Sayaendo class of vessels’ key features include reduction of hull weight, improvement in transportation efficiency and operational versatility, improved fuel consumption, and reduction in CO2 and NOx emissions.” Keppel’s maintenance works on the 2011-built, 155,691 m³ LNG Venus included maintenance of the cargohandling systems and the overhaul of the valves, cargo pumps and spray pumps. Works in drydock included blasting, painting, survey and inspection. LNG Venus arrived in Keppel Shipyard on 11 September and was due to be delivered in October 2017. LNG

TOP LNG CARRIER LIFECYCLE REPAIR AND MAINTENANCE YARDS, 2015-2017 Name Nakilat-Keppel Offshore & Marine (N-Kom)

Location

Repair/works 2017*

Repair/works 2016

Repair/works 2015

Qatar

Sembcorp Marine

Singapore

Keppel Shipyard

Singapore

Malaysia

Spain

France

Japan

Italy

Malaysia Marine & Heavy Engineering Navantia Damen Shiprepair MES-KHI Yura Dockyard San Giorgio del Porto

Source: LNG World Shipping/shipyards, September 2017 *year to September

www.lngworldshipping.com

LNG World Shipping | November/December 2017

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NAKILAT | 21

NSQL manages 14 Nakilat LNG carriers and four LPG carriers

Nakilat drydockings bring a two-year flurry of business to N-KOM There’s no place like home for Qatarbased shipowner Nakilat, which is putting some of the world’s biggest LNG carriers into drydock in Ras Laffan

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flurry of surveys is about to take place in Qatar, where, over the next 24 months, Nakilat is drydocking 22 wholly owned and several of its jointly owned LNG carriers – in total a third of its fleet. Nakilat, whose fleet comprises 63 Q-max, Q-flex and conventional LNG carriers,

will put more than half of its managed and operated LNG carrier fleet through special survey in the next 12 months. The confirmed drydockings include 10 wholly owned Nakilat ships, due for special survey in the next 12 months. Twelve more are due 12 months after that. Nakilat has confirmed that it expects all its wholly

LNG World Shipping | November/December 2017

22 | LIFECYCLE MAINTENANCE

owned LNG carriers to go into drydock at its joint-venture shiprepair yard, NakilatKeppel Offshore & Marine (N-KOM), which is part of the Erhama bin Jaber Al Jalahma Shipyard in Ras Laffan. Nakilatâ&#x20AC;&#x2122;s decision to survey the ships at home is not a surprise. Over the last decade, Qatar has invested heavily in home-grown maritime services, including shiprepairs, maintenance and logistics. And this year the government has stepped up its drive to increase local procurement, across all departments, from 30% to 100%. N-KOM has plenty of yard capacity to tackle the second special surveys. The shipyard has three docks: two graving docks measuring 400 m by 80 m

and 360 m by 66 m and one floating dock measuring 405 m by 66 m. It has five 400 m piers and two 400 m quays to repair Q-max, Q-flex and conventional LNG carriers. The three dock cranes can lift 30 tonnes, 50 tonnes and 100 tonnes. The ships scheduled for drydocking include the 10 whose management has changed hands. In August, Nakilat Shipping Qatar (NSQL) completed the takeover of these 10 LNG carriers from previous manager Shell International Trading & Shipping Company Limited (Shell). NSQL now manages 14 Nakilat LNG carriers and four LPG carriers. Shell retains management of 15 Nakilat LNG carriers. The remaining vessels will be

subsequently handed over in phases to NSQL. LNG World Shipping asked Nakilat to run through the works scheduled to take place over the next two years.

How many LNG carriers are due to undertake special surveys, and at which yards? What is the timeframe and scope for these special surveys? The 10 LNG carriers that have transitioned to NSQL management will undertake their second special surveys starting in 2018, up to 2019. All the repairs will be carried out at N-KOM. As per class requirement, the second special survey typically takes up to 22 days, including whatever other repair works are necessary.

How many LNG carriers are due to undergo drydocking, and at which yards? Next year will be a busy year for Nakilat, as 16 of our wholly and partially owned LNG carriers are expected to be drydocked at N-KOM. Some of these vessels are managed by NSQL and some by Shell. The others are managed by our partners, including Maran Gas Maritime, Mitsui OSK (MOL), NYK Line, Teekay LNG and Pronav.

What is the timeframe and scope for these drydockings? General repairs will be undertaken for most of the vessels due for drydocking in 2018 at times to be agreed with the charterer.

LIFECYCLE MAINTENANCE | 23

The 10 LNG carriers that have transitioned to NSQL management will undertake their second special surveys starting in 2018, up to 2019

What are your plans to manage the process? Each docking is planned to a high degree of detail, by a dedicated team of superintendents and technical personnel. We co-ordinate this with our charterers and with our fleet joint-venture partners to ensure that the operation proceeds smoothly and according to plan. We have prepared a master schedule for each vessel docking, taking into consideration the resources available, time, budget and critical paths.

What major equipment/ software upgrades are you planning, using whose products? We work closely with OEMs such as MAN Diesel, Cryostar, Kongsberg and Honeywell, to determine any upgrades or redundant components that require change-out. This is a constant process and runs through the entire life of the vessel. Over the past year, we have upgraded the satellite communication systems on board our operated fleet of vessels. We have installed Global Eagle Entertainmentâ&#x20AC;&#x2122;s EMC marine VSAT services, which includes global Ku-band connectivity and content to

enable a range of internet, data and voice services for the vessel and crew.

Are there plans to convert any of the ships into FSRUs? We are always reviewing business opportunities and there is a lot of interest in the FSRU sector.

How will you maintain fleet service levels and enable the yards to cope? Nakilat prides itself as the provider of choice, delivering clean energy worldwide. We work closely with our charterers to ensure that our maintenance programme does not disrupt service provision to end users. Together, we study the

docking options, based on shipyard availability and class survey windows and then decide on the optimal period for drydocking. This is often scheduled in such a way that it coincides with the maintenance period for the plant and jetties, to provide minimal disruption to the scheduled deliveries. LNG

24 | LIFECYCLE MAINTENANCE

KEEPING LNG CARRIERS SHIP-SHAPE IN THE FROZEN NORTH The worldâ&#x20AC;&#x2122;s newest exporter, Yamal LNG is also one of the most remote production plants. The 15 icebreaking LNG carriers fixed to the project will smash through frozen waters to deliver Arctic cargoes west and eastbound. To do so, the shipowners have made complex new arrangements for lifecycle maintenance, repairs and spares. Mitsui OSK outlines its plans. By Karen Thomas

LNG World Shipping | November/December 2017

itsui OSK (MOL) has ordered three of the 15 icebreaking 172,000 m3 Arc7 LNG carriers that will deliver cargoes from Yamal LNG in the Russian Arctic. The Japanese shipowner takes delivery of Vladimir Rusanov from Daewoo Shipbuilding & Marine Engineering (DSME) on 31 December, having put the LNG carrier through sea and gas trials off South Korea. The vessel will undergo ice trials in the Kara Sea before it loads its first cargo in April. MOL receives its second ice-class LNG carrier, Vladimir Vice, late next year. It takes

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LIFECYCLE MAINTENANCE | 25

delivery of its third, which it has yet to name, by December 2019. During the winter, the three LNG carriers will hammer through Arctic waters, sailing westbound from Sabetta to deliver transhipment cargoes to Zeebrugge, Montoir, Dunkerque and Bilbao. But in summer, the vessels have the option to sail eastbound, through the Northern Sea Route, to speed up deliveries to customers in Asia. The choice of route will depend on Yamal LNG’s annual delivery plans and the terms of its sales and purchase agreements.

Wear and tear Whichever way they sail, the carriers will endure the harshest waters on earth. Ships sailing east will battle sea ice up to 2.1 m thick in summer. In winter, crew will load cargoes at Sabetta in temperatures below -40°C, with added wind chill as the ships set sail for icebound waters. “It’s an incredibly tough environment,” said MOL LNG Transport (Europe) managing director Andy Hill. “What’s surprised me most from a recent visit to Murmansk, was the impact that ice has on a ship’s hull, in particular.” Having seen an icebreaker in dry dock, Mr Hill believes hull coatings will be critical to ensure sustainable performance. “There is so much more to breaking through the ice than straightforward propulsive power,” he said. “Moving through ice creates a lot of vibration. We have to monitor this very, very carefully. We will keep a very close eye on vibration levels and the impact of this on wear and tear. “When considering machinery and equipment reliability we also consider varying aspects of heat, extreme cold and dust as the vessels transit polar, temperate and potentially tropical seas, particularly on exposed equipment. “The level of winterisation we’ve installed on the exposed decks of our ships exceeds those of icebreaking ships I’ve seen in Murmansk – and so does the level of insulation between outside and inside, which means improved conditions for our seafarers.” It is critical to predict and minimise the icebreaking LNG carriers’ lifecycle and maintenance costs. MOL has identified its priorities, based on risk analysis, undertaking Hazid and Hazop and carrying out SWOT studies. To monitor hull, machinery and equipment performance MOL has

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Team spirit

Whichever way they sail, MOL's three Arc7 LNG carriers will endure the harshest waters on earth

supplemented its routine reporting with performance-monitoring systems from Kyma. It will capture vibration levels from both fixed and portable sensors. “Our primary focus has been working with the manufacturers,” Mr Hill said. “Although we have experience with the engines installed on these vessels, we’ve reached agreement for a through-life maintenance contract with Wärtsilä for the engines.” The deal reassures the customer about reliability. It also makes it easier to predict and manage the supply and maintenance costs. So MOL has concluded several through-life deals with suppliers, working with Cryostar, Honeywell, ABB, Alfa Laval and Atlas Copco to complete the process. The suppliers agree to provide periodic health checks and will keep technicians on standby, visas in passports, to fly out to troubleshoot.

MOL is one of four shipowners to order the icebreaking LNG carriers that will make up the 15-strong fleet of specialist vessels for the Yamal LNG project. Sovcomflot, Teekay LNG, MOL and Dynagas have set up a steering committee and working groups to look at new technology and to tackle some of the project’s challenges. Yamal LNG and the owners chair the working groups, sharing expertise and responsibilities. The four owners have worked closely with Yamal LNG. Had Yamal LNG taken the lead, said one observer, “accountability for those costs would have stopped with the charterer, rather than with the shipowner. That would have implied less of a separation between duty and care that the charterer would look for, as the shipowners are the experts”. MOL believes strongly in reliability, availability and maintainability (RAM) studies. It invited the other owners to participate and agreed a joint focus on the Wärtsilä gas-burning diesel engines. MOL approached classification society DNV GL, which has a large database of machinery and equipment failures, for this study. MOL developed the RAM study to scrutinise every aspect of the ice-class LNG carriers’ machinery, the propulsion systems, power distribution, cargo systems and containment systems. The study helped to identify the

Condition-based monitoring helps MOL to spot problems early

LNG World Shipping | November/December 2017

26 | LIFECYCLE MAINTENANCE

required depot spares. “Experience goes so far,” Mr Hill said. “But we felt there was a need to look separately at the documented data and to have that dialogue with the manufacturers and suppliers – to understand their stock-level process. The DNV GL RAM study has enabled us to do that.” In late October the four owners were discussing protocols for spares withdrawals if two or more ships report the same failure. They were also negotiating with Yamal LNG owners Novatek and Total over inventory volumes and storage space for spares. Space should become available in Sabetta but it was unclear how much at startup. “From the point of view of repairs and maintenance, those depot spares will need to be held relatively close to the project,” Mr Hill said “They’ll be arranged in Europe. However, some of our suppliers with whom we’ve agreed through-life contracts will hold their own spares that we can draw on – but not pay for until we do so – in Europe and in Asia. “If you need a part, you need to know how long it will take to produce and deliver, particularly now, when the industry is so cautious about having a redundant piece of equipment, but the receiver may reject a ship because the redundant equipment is not fully operational before the vessel loads. That would mean having two engines, duplicate compressors and so forth. “It’s about having the flexibility to complete the voyage if, for example, you have a repeat failure. That’s one of the main concerns.” MOL will use condition-based maintenance (CBM) to identify any problems early, and prevent damage to equipment. Being pro-active increases reliability and availability and reduces downtime. CBM makes it possible to qualify for the classification criteria of condition-based maintenance schemes, avoiding the need for a class surveyor inspection and reducing the overall cost of class surveys. MOL’s CBM initiative is part of a larger project, taking a fresh approach to managing asset integrity. It uses CBM technologies such as vibration monitoring, thermographic inspection and lube-oil analysis to determine the health of its machinery and equipment. It has focused in particular on machinevibration monitoring. “Considering machine repair or replacement costs, loss of production, quality problems, environmental impact and other negative effects of deteriorating machine condition, the implementation of vibration monitoring

LNG World Shipping | November/December 2017

MOL gained some Arctic experience working at Sakhalin LNG. (Credit: Shell)

is well justified,” Mr Hill said. Like Teekay LNG, MOL plans to drydock its three LNG icebreakers every two and a half years. It will stagger the schedule, working around charterer requirements. That timescale may change, with experience. “It may evolve, depending on the operating profile and the impact that the harsh environment will have on the vessels,” Mr Hill said

Planning Bureau Veritas and the Russian Register are jointly classing the 15 icebreaking LNG carriers. In the early days of LNG, vessels went to drydock every two and a half years, said BV managing director Yannis Calogeras. These more frequent surveys make sense as class and owners study how the ships, their equipment and their coatings stand up to harsh weather, he said. “We need to measure how much pounding the hull coatings take from the ice. We won’t know the full impact on this, or on the other equipment, until the fleet comes into service.” MOL has also focused on the human element. As a group, MOL gained some ice experience on the Sakhalin LNG project. However, few of its officers had worked in Arctic waters. It decided to base the nine Vladimir Rusanov deck and engineering officers at DSME’s Okpo shipyard, from design stage to final delivery, to get to know

every nook and cranny of this new class of LNG carrier. MOL’s London-based staff and officers on site have supervised factory-acceptance tests and the shipyard inspections. “This is the first time we’ve involved seafarers from the very outset,” Mr Hill said. MOL also teamed up with the two Dutch heavy-lift shipowners, BigRoll and Spliethoff, that have delivered the Yamal LNG plant modules from fabrication yards in China, sailing through the Northern Sea Route to Sabetta. MOL’s Rotterdam-based crew managers arranged for the Vladimir Rusanov officers to join the heavy-lift vessels to learn the essential elements of ice navigation as their counterparts sailed through the Northern Sea Route, with Russian icebreaker owner-operator Rosatomflot’s passage-cutting vessels in attendance. The MOL officers have also worked closely with Rosatomflot. The Vladimir Rusanov officers joined one of the company’s icebreakers for a tour of the polar regions to learn about icebreaker technology and communications systems and to build relationships with the Russian officers who work there. “It was particularly valuable for our senior officers to learn about the different ice formations and experience the noise and the vibrations that come with breaking through ice,” Mr Hill said. “It was a revelation to learn how quickly a vessel can become beset by ice. We’ve learned about the importance of impulsive engine

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LIFECYCLE MAINTENANCE | 29

movements to maintain way and how quickly the density and nature of the ice can change. “A vessel can increase speed very rapidly – or come to almost a complete stop. If the vessels are moving in convoy, often at distances of less than a mile, they can also be moving at different speeds as they encounter different challenges. “You have to react very quickly to avoid collisions.”

Distant waters It is not yet clear how much time the 15 Arc7 LNG icebreakers will spend in convoy; the vessels are designed for independent navigation through the Northern Sea Route. Convoys have advantages and disadvantages. Mr Hill does not expect the vessels to operate formal convoys as standard, outside Ob Bay and River transits, “unless conditions at sea are close to design extremes”. “Sailing in convoy allows navigation with a certain dispatch speed, creating fuel economy. But how often we proceed in a formal or informal convoy will also depend on the density of traffic,” he said. When the weather is at its most brutal, the LNG carriers can deploy a Rosatomflot icebreaker escort. Communications are particularly tricky in the Arctic. MOL decided early on to rework its satellite arrangements, having discovered, based on latitude and sailing

MOL's suppliers will keep technicians on standby, visas in passports, to fly out to troubleshoot

course, that the position of masts and funnels could restrict its communications. “We’ve respecified the satellite domes, making them bigger and adding a second dome to each ship,” Mr Hill said. “This gives us a greater degree of coverage because the satellites are low on the horizon. The proximity of masts and funnels indicated to us an additional challenge to communications, not only from latitude but from the course the vessels are steering. “All three ships will have two satellite domes and we have contracted NSSL to provide the satellite communications. This two-dome structure will be unique to the MOL Arctic fleet. There’s been a lot of correspondence.” Iridium will provide the backup system. MOL says that although Iridium is the most reliable provider in the Arctic, it has a relatively low data-transfer capability – “And

this has implications for real-time remote access and full use of CBM techniques,” Mr Hill said. To ponder the remoteness of northern Russia stretches the imagination. There are no big commercial ports between Murmansk and Provideniya, the oil port and cruise terminal near the Bering Strait. Russia’s network of north coast naval bases is off-limits to civilians. However, help will be at hand, within 48 hours’ sailing time, at all points, Mr Hill said. Every section of the Northern Sea Route has dedicated Rosatomflot icebreakers. Many have helipads for emergency airlifts and are fitted out to deliver medical and even dental services. Russia Inc has thrown its weight behind Novatek’s Arctic LNG ambitions. It is keeping its icebreakers on standby. The Russian port authority Rosmaport provides escort tugs and pilots at Sabetta and has agreed with MOL to provide ice pilots for the Northern Sea Route transits. At first, at least, two ice pilots will join every LNG carrier that loads at Sabetta, staying on board for the round trip. Rosmaport pilots are licensed to work in all Russian Arctic ports. Having watched how the pilots work, Mr Hill is confident that his crew are in safe hands.“The way they work – their experience and depth of knowledge – is seriously impressive,” he concluded. “These guys have a sixth sense for ice. LNG

THE PURPOSE-BUILT ICEBREAKING LNG CARRIERS CHARTERED TO YAMAL LNG Hull number

Owner/s

Capacity, m³

Entry into service

Name

2418

Sovcomflot

172,000

2016, November

Christophe de Margerie

2421

Dynagas

172,000

2017, October

Boris Vilkitsky

2423

Teekay/CLNG

172,000

2017, December

Eduard Toll

2424

Teekay/CLNG

172,000

2018, January

Rudolf Samoylovich

2422

Dynagas

172,000

2018, January

Fedor Litke

2425

Teekay/CLNG

172,000

2018, January

2426

CSDC/MOL

172,000

2018, March

2427

Dynagas

172,000

2018, May

2428

Dynagas

172,000

2018, August

2429

Dynagas

172,000

2018, December

2432

CSDC/MOL

172,000

2018, December

2430

Teekay/CLNG

172,000

2019, January

2431

Teekay/CLNG

172,000

2019, January

2434

CSDC/MOL

172,000

2019, December

2433

Teekay/CLNG

172,000

2020, February

Vladimir Rusanov

Vladimir Vice

SOURCE: LNG World Shipping, VesselsValue, shipowners

www.lngworldshipping.com

LNG World Shipping | November/December 2017

BW Gas Nova Shipping

ENI GasLog Ltd Golar LNG Partners

Sinokor Merchant Marine Dynagas LNG Partners LP

Qatar Gas Transport Co

JC Nakilat

Tsurumi Sunmarine Excelerate Exmar JV Gas Transport

Best Measure

North West Shelf Shipping Hoegh LNG Partners Shell Trading and Shipping Co Humpuss Trans Inc Sovcomflot

8 6 4 3 2 1

Grand total: 71 Research: Karen Thomas Infographic: Richard Neighbour

Korea Line Corp Knutsen OAS Shipping AS

GasLog Partners LP

Exmar Shipmanagement

J4 Consortium

JERA

China LNG Shipping International

Hyproc Shipping Teekay LNG Partners

K Line

Hyundai LNG Shipping Co

MISC

Pronav

NYK Line

Maran Gas Maritime BW Pavilion LNG Pte Ltd

Malt LNG

Companies with LNG vessels with special surveys due in the next 12 months

Key: number of ships due for survey

Companies with LNG vessels with special surveys due in the next 13 â&#x20AC;&#x201C; 24 months Key: number of ships due for survey

12 7 4 3 2 1 Maran Gas Maritime

Hyproc Shipping

National Gas Shipping Co

Maran Nakilat

Dynagas Holding Ltd K Line

BW Gas

Milaha Gas and Petrochem Humpuss Trans Inc

MOL

Petronet LNG NYK Line

Petronet LNG

MISC

Golar Power Ltd

Malt LNG Dynagas LNG Partners LP

Qatar Gas Transport Co Shell Trading and Shipping Co

Grand total: 104

Trada International

NYK LNG Ship Management

Oman Shipping Co SAOC

BP Mitsubishi Corporation

POLY-GCL Petroleum Group

China Merchants Bank

Tokyo LNG Tanker Tsurumi Sunmarine GasLog Partners LP

China LNG Shipping International

Korea Line Corp

Hyundai LNG Shipping Co North West Shelf Shipping

Elcano

Golar LNG Ltd

Chevron Shipping

Sovcomflot

Thenamaris J4 Consortium

H Line Shipping Pan Ocean

GasLog Ltd

SK Shipping

Teekay LNG Partners

Knutsen OAS Shipping AS TMS Cardiff Gas

Sinokor Merchant Marine

32 | STATS ANALYSIS

LNGC owners hit pause Since LNG World Shipping last published its fleet statistics on 16 August, shipowners and shipyards have agreed to delay the scheduled delivery dates for 25 vessels – or 20% of the 124ship orderbook

he new completion dates fall between one and 11 months after the earlier agreed handovers. The delays include 11 vessels to be delivered in 2018 instead of in 2017. Some 58 LNG carriers will now be commissioned in 2018, writes Mike Corkhill. One of the vessels rescheduled for 2018 is Elcano’s 174,000 m3 Castillo de Merida. Although the ship, Hull No 8177 at Imabari in Japan, has completed sea trials, it was not handed over in October, having been delayed to January. The handover of its sistership Castillo de Caldedas is delayed six months, to March 2018. The delayed completions, many of them relatively modest, will benefit owners, builders and charterers alike. Deferred deliveries align vessel availability with the shipping requirements of delayed new liquefaction projects. Postponements also help the specialist LNG shipyards to cope with unprecedented newbuilding activity. Although the 150 LNG carriers ordered between 2012 and 2014 were a boon for the yards, building the vessels required a major commitment in labour and productivity gains. Delayed deliveries also assist shipowners at a time of fleet overtonnaging. Although the recent

LNG World Shipping | November/December 2017

spate of completions helped to drive spot market freight rates down towards the low US$30,000s/ day earlier this year, the number of vessels available for immediate work is now tightening. Improved cargo tank insulation, partial reliquefaction plants and efficient propulsion units on modern LNG carriers enable them to minimise cargo boil-off gas losses and to sail at lower, more economical service speeds, often on longer deepsea routes, to avoid expensive canal tolls. The combination of delayed deliveries, slow steaming, new production volumes coming on stream and arbitrage opportunities opening between the Atlantic Basin and Asia supports a freight-rate rebound. Some recent spot cargoes have been fixed at the high US$40,000s/day, as tonnage becomes scarcer.

Records

As befits a dynamic industry with a growing fleet and surging global trade volumes, records continue for LNG shipments. China’s imports up to September reached 26.7M tonnes (mt), against 26.8M tonnes for the whole of 2016. China could well emerge as the second-

www.lngworldshipping.com

STATS ANALYSIS | 33

– new deliveries delayed largest buyer of LNG in 2017, overtaking South Korea. Although South Korea’s LNG purchases in the period January-September reached 27.3 mt, Chinese import volumes are currently growing at a faster rate. Operators of established LNG import terminals at Dahej in India, Sines in Portugal and Barcelona in Spain confirm record monthly receipts of LNG in August, of 1.4M tonnes, 0.46M tonnes and 0.53M tonnes. Australia has been consolidating its status as the world’s second LNG exporter in recent months. It shipped 5.7M tonnes from its seven operating liquefaction terminals in July 2017, a volume 50% greater than that of the same month in 2016. One series of ships to escape the delays is the four 165,000 m3 vessels that the Japan Marine United (JMU) Tsu yard is building for charter to Tokyo Gas. The carriers are still down for their targeted handovers in November of this year, March 2018, and February and April of 2019. The vessels will join a select fleet boasting IHI’s self-supporting, prismatic-shape IMO Type B (SPB) containment system. So far, only two LNGCs have been built with this independent tank system, an 89,000 m3 pair completed in 1993. Key advantages of the robust SPB system are the shape of the tanks and their ability to cope with all cargo sloshing loads, irrespective of the filling level. SPB tanks also meet the criteria of “leak before failure”. Fracture mechanics has helped crackpropagation analysis to show that if a crack develops in an SPB tank, its growth will not be rapid enough to allow excessive leakage into the cargo hold. This allows the use of only a partial secondary barrier, consisting of a spray shield and drip pans, for example, with independent IMO Type B tanks. Each JMU ship has four SPB cargo tanks of unprecedented size. The construction of these pioneering units presented challenges for IHI, creating earlier tank-delivery delays. When the series was ordered in 2014, on the back of the Tokyo Gas charter to lift Cove Point export cargoes on the US east coast, two ships were contracted for 2017 delivery and two for 2018. The first of the four JMU ships was named Energy Liberty at a yard ceremony on 16 October. The LNGC, with SPB tanks in place, will now undergo final preparations for service alongside Tsu’s fitting-out jetty. Whether Energy Liberty will be delivered on

www.lngworldshipping.com

its appointed November handover date is open to question. In October, Tokyo Gas president Michiaki Hirose stated that the first cargoes from the Cove Point liquefaction plant, now virtually complete, will reach Japan “early in 2018”.

FSRU focus

Just three ships have been delivered and two ordered since LNG World Shipping published its fleet statistics in August. Both orders and one of the deliveries are floating storage and regasification units (FSRUs). The new regas vessel contracts comprise one unit for India and another for Indonesia. Swan Energy is having a 180,000 m3 FSRU constructed at Hyundai Heavy Industries to enable Jafrabad in India’s northwestern Gujarat state to start LNG imports in 2019. Mitsui OSK Lines (MOL), which is also to operate Energy Liberty, will participate in the Swan scheme. The Japanese owner will provide an LNGC for use as a floating storage unit (FSU) at Jafrabad and will operate both the FSRU and FSU vessels. The second FSRU is for Pertamina. Indonesia’s state-owned energy company is part of a shipowning consortium with Japanese traders Marubeni and Sojitz. The consortium has booked a 170,000 m³ FSRU at Samsung Heavy Industries to supply a power plant that Marubeni is building at Cilacap in Central Java for 2020 completion. MOL is also behind the latest FSRU delivery, as full owner of the Daewoo Shipbuilding & Marine Engineering-built MOL FSRU Challenger. At 263,000 m3, it has the largest cargo-carrying capacity of any FSRU, able to regasify almost 11,000 tonnes of LNG per day. MOL FSRU Challenger was originally contracted as an import terminal for Gas Sayago at an offshore jetty close to the Uruguayan capital Montevideo. That planned 20-year project has stalled and MOL is negotiating with Shell, among others, to see whether the FSRU could instead supply a larger South American market. For now, MOL has secured alternative employment for MOL FSRU Challenger of shorter duration. The regas vessel is to go on charter for three years to Botaş, in Turkey, to import LNG for the southern part of that country's Marmara region. LNG

Delayed deliveries, slow steaming, new production volumes and arbitrage opportunities between the Atlantic Basin and Asia support a freightrate rebound

LNG World Shipping | November/December 2017

YOUR PARTNER IN SHIP PERFORMANCE MONITORING www.kyma.no

34 | STATISTICS

LNG CARRIERS ON ORDER LNGC ORDERBOOK AS OF 19 OCTOBER 2017 SOUTH KOREA Hull no

Shipowner

Capacity, m3

Delivery

Charterer

Containment

Class

Propulsion

Details

Shell business

Daewoo Shipbuilding & Marine Engineering (DSME), Okpo 2456

Maran Gas

173,400

2019

Shell

GTT No96

DNV GL

LSDF (HP)

2457

Maran Gas

173,400

2019

–

GTT No96

LSDF (HP)

open

2458

Maran Gas

173,400

2018

Shell

GTT No96

ABS/CCS

LSDF (HP)

Shell business

2459

Maran Gas

173,400

2019

Shell

GTT No96

LR/CCS

LSDF (HP)

Shell business

2466

Maran Gas

174,000

2019

–

GTT No96

ABS

LSDF (HP)

open

2467

Maran Gas

174,000

2019

–

GTT No96

LSDF(HP)

open

2468

Maran Gas

173,400

2020

–

GTT No96

DNV GL

DFDE

FSRU; open

2416

Teekay

173,400

2017

Shell

GTT No96

DNV GL

LSDF (HP)

Shell business

2417

Teekay

173,400

2018

Shell

GTT No96

DNV GL

LSDF (HP)

Shell business

2453

Teekay

173,400

2018

Shell

GTT No96

DNV GL

LSDF (HP)

Shell business

2454

Teekay

173,400

2018

Shell

GTT No96

DNV GL

LSDF (HP)

Shell business

2455

Teekay

173,400

2019

Yamal LNG

GTT No96

DNV GL

LSDF (HP)

Yamal cargoes

2461

Teekay

173,400

2018

Bahrain LNG

GTT No96

DNV GL

LSDF (HP)

Bahrain FSU

2421

Dynagas

172,000

2018

Yamal LNG

GTT No96

BV/RS

DFDE

icebreaking LNGC

2422

Dynagas

172,000

2017

Yamal LNG

GTT No96

BV/RS

DFDE

icebreaking LNGC

2427

Dynagas

172,000

2019

Yamal LNG

GTT No96

BV/RS

DFDE

icebreaking LNGC

2428

Dynagas

172,000

2019

Yamal LNG

GTT No96

BV/RS

DFDE

icebreaking LNGC

2429

Dynagas

172,000

2019

Yamal LNG

GTT No96

BV/RS

DFDE

icebreaking LNGC

2426

CSDC/MOL

172,000

2019

Yamal LNG

GTT No96

BV/RS

DFDE

icebreaking LNGC

2432

CSDC/MOL

172,000

2020

Yamal LNG

GTT No96

BV/RS

DFDE

icebreaking LNGC

2424

CSDC/MOL

172,000

2019

Yamal LNG

GTT No96

BV/RS

DFDE

icebreaking LNGC

2423

Teekay/CLNG

172,000

2018

Yamal LNG

GTT No96

BV/RS

DFDE

icebreaking LNGC

2425

Teekay/CLNG

172,000

2018

Yamal LNG

GTT No96

BV/RS

DFDE

icebreaking LNGC

2430

Teekay/CLNG

172,000

2019

Yamal LNG

GTT No96

BV/RS

DFDE

icebreaking LNGC

2431

Teekay/CLNG

172,000

2020

Yamal LNG

GTT No96

BV/RS

DFDE

icebreaking LNGC

2433

Teekay/CLNG

172,000

2020

Yamal LNG

GTT No96

BV/RS

DFDE

icebreaking LNGC

2434

Teekay/CLNG

172,000

2020

Yamal LNG

GTT No96

BV/RS

DFDE

icebreaking LNGC

2447

Flex LNG

174,000

2018

–

GTT No96

–

LSDF (HP)

open

2448

Flex LNG

174,000

2018

–

GTT No96

–

LSDF (HP)

open

2435

BW Group

173,400

2018

–

GTT No96

DNV GL

LSDF (HP)

open

2436

BW Group

173,400

2018

–

GTT No96

DNV GL

LSDF (HP)

open

2488

BW Group

174,000

2019

–

GTT No96

DNV GL

LSDF (HP)

FSRU; open

2489

BW Group

174,000

2019

–

GTT No96

DNV GL

LSDF (HP)

open

2460

Chandris/K Line

173,400

2018

GTT No96

LSDF (HP)

BP business

2464

Chandris/K Line

173,400

2018

GTT No96

LSDF (HP)

BP business

2441

BP Shipping

173,400

2018

GTT No96

LSDF (HP)

BP business

2442

BP Shipping

173,400

2018

GTT No96

LSDF (HP)

BP business

2443

BP Shipping

173,400

2018

GTT No96

LSDF (HP)

BP business

2444

BP Shipping

173,400

2019

GTT No96

LSDF (HP)

BP business

2445

BP Shipping

173,400

2019

GTT No96

LSDF (HP)

BP business

2446

BP Shipping

173,400

2019

GTT No96

LSDF (HP)

BP business

2462

MOL/Itochu

180,000

2018

Uniper

GTT No96

–

LSDF (HP)

Uniper business

2470

Flex LNG

173,400

2019

–

GTT No96

–

LSDF(HP)

open

2471

Flex LNG

173,400

2019

–

GTT No96

–

LSDF(HP)

open

Samsung Heavy Industries (SHI), Geoje 2189

Golar Power

170,000

2018

Golar Power

GTT MkIII

DNV GL

DFDE

Sergipe FSRU

2130

GasLog

174,000

2018

Shell

GTT MkIII

ABS

LSDF (HP)

Shell business

LNG World Shipping | November/December 2017

www.lngworldshipping.com

YOUR PARTNER IN SHIP PERFORMANCE MONITORING www.kyma.no

STATISTICS | 35

2131

GasLog

174,000

2017

Shell

GTT MkIII

ABS

LSDF (HP)

Shell business

2212

GasLog

180,000

2019

Centrica

GTT MkV

–

LSDF (LP)

Sabine Pass exports

2213

GasLog

180,000

2019

–

GTT MkV

–

LSDF (LP)

open

2081

SK Shipping/Marubeni

180,000

2018

Total

GTT MkIII

LSDF (LP)

Sabine Pass exports

2107

Flex LNG

174,000

2018

–

GTT MkIII

ABS

LSDF (HP)

open

2108

Flex LNG

174,000

2018

–

GTT MkIII

ABS

LSDF (HP)

open

–

Petronas

180,000

2020

Petronas

GTT MkIII

–

N/A

LNG FPSO

2148

MOL/NYK Line

174,000

2018

Mitsui & Co

GTT MkIII

–

DFDE

Cameron exports

2149

MOL/Mitsui & Co

174,000

2018

Mitsui & Co

GTT MkIII

–

DFDE

Cameron exports

2150

MOL/Mitsui & Co

174,000

2018

Mitsui & Co

GTT MkIII

–

DFDE

Cameron exports

2153

SK Shipping

174,000

2018

Kogas

KC-1

–

DFDE

Sabine Pass exports

2154

SK Shipping

174,000

2018

Kogas

KC-1

–

DFDE

Sabine Pass exports

2220

Höegh LNG

170,000

2019

–

GTT MkIII

–

DFDE

FSRU; open

2233

Korea Line

7,500

2019

Kogas

KC-1

KRS

DFDE

South Korea coast

2234

Korea Line

7,500

2019

Kogas

KC-1

KRS

DFDE

South Korea coast/

Pertamina consortium

170,000

2019

Pertamina

GTT MkIII

–

DFDE

Indonesia FSRU

bunkering –

Hyundai Heavy Industries (HHI), Ulsan 2865

Höegh LNG

170,000

2018

Penco LNG

GTT MkIII

DNV GL

DFDE

Chile FSRU

2909

Höegh LNG

170,000

2018

Global Energy

GTT MkIII

DNV GL

DFDE

Pakistan FSRU

2732

MISC

150,000

2018

Petronas

Moss

UST

Petronas projects

2735

MISC

150,000

2018

Petronas

Moss

UST

Petronas projects

2800

GasLog

174,000

2018

Shell

GTT MkIII

DNV GL

LSDF (LP)

Shell business

2801

GasLog

174,000

2018

Total

GTT MkIII

DNV GL

LSDF (LP)

Total business

2854

Gazprom

174,000

2017

Gazprom

GTT MkIII

DFDE

Kaliningrad FSRU

2937

SK Shipping

180,000

2019

SK E&S

GTT MkIII

–

LSDF (LP)

Freeport exports

2938

SK Shipping

180,000

2019

SK E&S

GTT MkIII

–

LSDF (LP)

Freeport exports

2945

Kolin/Kalyon

170,000

2019

Kolin/Kalyon

GTT MkIII

–

DFDE

Turkey FSRU

2963

Knutsen OAS

180,000

2020

Iberdrola

GTT MkIII

–

LSDF (HP)

Corpus Christi exports

Knutsen OAS

180,000

2020

Endesa

GTT MkIII

–

LSDF (HP)

Corpus Christi exports

Triumph Offshore

180,000

2019

Swan Energy

GTT MkIII

–

DFDE

Jafrabad FSRU

2964 –

Hyundai Samho Heavy Industries (HSHI), Samho-Myun S856

Teekay

164,000

2019

GTT MkIII

–

DFDE

BP business

S857

Teekay

164,000

2019

GTT MkIII

–

DFDE

BP business

7,500

2018

Nauticor/SGD

Type C

DFDE

Baltic bunker vessel

Hyundai Mipo Dockyard, Ulsan –

Bernhard Schulte

JAPAN Mitsubishi Heavy Industries (MHI), Nagasaki 2310

K Line

155,000

2018

Inpex Corp

Moss

ClassNK

UST

Ichthys exports

2316

NYK

155,000

2018

Tokyo Electric

Moss

ClassNK

UST

Wheatstone exports

2321

MOL

177,000

2018

Mitsui & Co

Moss

ClassNK

StaGE

Cameron exports

2323

MOL

177,000

2018

Mitsui & Co

Moss

ClassNK

StaGE

Cameron exports

2322

NYK

177,000

2019

Mitsui & Co

Moss

ClassNK

StaGE

Cameron exports

2324

NYK

165,000

2018

Mitsui & Co

Moss

ClassNK

StaGE

Cameron exports

2325

NYK

165,000

2018

Mitsui & Co

Moss

ClassNK

StaGE

Cameron exports

2326

MOL/Chubu Electric

180,000

2018

Chubu Electric

Moss

ClassNK

StaGE

Freeport exports

2327

NYK/Chubu Electric

180,000

2018

Chubu Electric

Moss

ClassNK

StaGE

Freeport exports

2332

Mitsubishi Corp

165,000

2019

Mitsubishi

Moss

ClassNK

StaGE

Mitsubishi business

Kawasaki Heavy Industries (KHI), Sakaide 1713

K Line

164,700

2017

Chubu Electric

Moss

ClassNK

UST

Chubu Electric use

1720

MOL

164,700

2018

Chubu Electric

Moss

ClassNK

UST

Chubu Electric use

1718

K Line

182,000

2018

Inpex Corp

Moss

DFDE

Ichthys-Taiwan

1731

NYK/Kepco

177,000

2018

Kansai Electric

Moss

ClassNK

DFDE

Cove Point exports

1728

MOL

155,000

2018

Mitsui & Co

Moss

ClassNK

DFDE

Cameron exports

1729

MOL

155,000

2019

Mitsui & Co

Moss

ClassNK

DFDE

Cameron exports

1734

MOL/Chubu Electric

177,000

2018

Chubu Electric

Moss

ClassNK

DFDE

Freeport exports

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36 | STATISTICS

1735

NYK/Chubu Electric

177,000

2018

Chubu Electric

Moss

ClassNK

DFDE

Freeport exports

GNF business

Imabari Shipbuilding, Imabari 8177

Elcano

174,000

2018

GNF

GTT MkIII

LSDF (HP)

8188

Elcano

174,000

2018

GNF

GTT MkIII

LSDF (HP)

GNF business

8200

K Line

178,000

2021

Mitsui & Co

GTT MkIII

ClassNK

LSDF (HP)

Cameron exports

8215

Unknown

178,000

2022

–

GTT MkIII

–

LSDF (HP)

open

8216

Unknown

178,000

2022

–

GTT MkIII

–

LSDF (HP)

open

8217

Unknown

178,000

2022

–

GTT MkIII

–

LSDF (HP)

open

165,000

2017

Tokyo Gas

SPB

ClassNK

DFDE

Cove Point exports

Japan Marine United, Kumamoto 5070

MOL/Tokyo LNG Tanker

5071

NYK/Tokyo LNG Tanker

165,000

2018

Tokyo Gas

SPB

ClassNK

DFDE

Cove Point exports

5072

MOL/Tokyo LNG

165,000

2019

Tokyo Gas

SPB

ClassNK

DFDE

Cove Point exports

165,000

2019

Tokyo Gas

SPB

ClassNK

DFDE

Cove Point exports

Capacity, m3

Delivery

Charterer

Containment

Class

Propulsion

Details

APLNG exports

Tanker 5073

MOL/Tokyo LNG Tanker

CHINA Hull no

Shipowner

Hudong-Zhonghua Shipbuilding, Shanghai 1719A

CESI/MOL

174,000

2018

Sinopec

GTT No96

LR/CCS

DFDE

1720A

CESI/MOL

174,000

2018

Sinopec

GTT No96

LR/CCS

DFDE

APLNG exports

1664A

CNOOC/CLNG/TK

174,000

2018

Shell

GTT No96

ABS/CCS

DFDE

QCLNG exports

1665A

CNOOC/CLNG/TK/BW

174,000

2018

Shell

GTT No96

ABS/CCS

DFDE

QCLNG exports

1666A

CNOOC/CLNG/TK/BW

174,000

2019

Shell

GTT No96

ABS/CCS

DFDE

QCLNG exports

1810A

MOL

174,000

2019

Yamal LNG

GTT No96

–

DFDE

Yamal cargoes

1811A

MOL

174,000

2020

Yamal LNG

GTT No96

–

DFDE

Yamal cargoes

1812A

MOL

174,000

2020

Yamal LNG

GTT No96

–

DFDE

Yamal cargoes

1813A

MOL

174,000

2020

Yamal LNG

GTT No96

–

DFDE

Yamal cargoes

Dynagas

174,000

2019

–

GTT No96

–

DFDE

FSRU; open

30,000

2017

CNPC Kunlun

Type C

CCS

DFDE

China coast

28,000

2017

CNPC Kunlun

Type C

CCS

DFDE

China coast

Exmar

25,000

2018

–

SPB

N/A

FSRU; open

VGS

N/A

2018

VGS

TBC

–

N/A

LNG FRU

45,000

2018

Saga LNG

LNT A-Box

ABS

DFDE

China coast

–

Ningbo Xinle Shipbuilding, Ningbo XL-157

PetroChina

Cosco Dalian Shipyard, Dalian N588

Dalian Inteh

Wison Offshore & Marine, Nantong S-188 –

China Merchant Heavy Industry, Nantong 188

Landmark Capital

Shipping Keppel Singmarine, Nantong –

Stolt-Nielsen

7,500

2018

TBC

Type C

–

DFDE

Coastal Europe

–

Stolt-Nielsen

7,500

2018

TBC

Type C

–

DFDE

Coastal Europe

14,000

2017

–

Type C

CCS

LSDF (LP)

China coast

Shipowner

Capacity, m3

Delivery

Charterer

Containment

Class

Propulsion

Details

Anthony Veder

18,000

2017

Skangas

Type C

DFDE

Baltic trading

Qidong Fengshun Ship Heavy Industries, Qidong FS-007A

Zhejiang Huaxiang

GERMANY Hull no Neptun Werft, Rostock S.575

Table includes newbuilding FSRUs, LNG FPSOs and LNG bunker vessels. Propulsion key: DFDE = dual-fuel diesel-electric; ST = steam turbine; UST = ultra steam turbine; StaGE = steam turbine and gas engine; LSDF (HP) = low-speed dual-fuel (high-pressure); LSDF (LP) = low-speed dual-fuel (low-pressure) LNG World Shipping, data as of 16 August 2017

LNG World Shipping | November/December 2017

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YOUR PARTNER IN SHIP PERFORMANCE MONITORING www.kyma.no

STATISTICS | 37

LNG CARRIER NEWBUILDINGS DELIVERED 1 JANUARY – 19 OCTOBER 2017 Vessel name

Delivery

Capacity, m3

Owner

Builder

Charterer

Containment

Details

Cesi Qingdao

1.2017

174,000

CESI/MOL

Hudong

Sinopec

GTTNo96

APLNG exports

Maran Gas Roxana

1.2017

173,400

Maran Gas

Daewoo

Shell

GTTNo96

Shell business

Maran Gas Ulysses

1.2017

174,000

Maran Gas

Hyundai Samho

Shell

GTTMkIII

Shell business

Seri Cenderawasih

1.2017

150,000

MISC

Hyundai

Petronas

Moss

Petronas projects

JS Ineos Innovation

1.2017

27,500

Evergas

Sinopacific

Ineos

Type C

Ethane service

Torben Spirit

2.2017

173,400

Teekay

Daewoo

Shell

GTTNo96

Shell business

Maran Gas Olympias

2.2017

173,400

Maran Gas

Daewoo

Shell

GTTNo96

Shell business

Asia Integrity

2.2017

160,000

Chevron

Samsung

Chevron

GTTMkIII

Gorgon exports

Ougarta

3.2017

170,000

Hyproc Shipping

Hyundai

Sonatrach

GTTMkIII

Algerian exports

BW Integrity

3.2017

170,000

BW Group

Samsung

Pakistan GasPort

GTTMkIII

Port Qasim FSRU

JS Ineos Intuition

3.2017

27,500

Evergas

Yangzijiang

Ineos

Type C

Ethane service

SM Eagle

4.2017

174,000

Korea Line

Daewoo

Kogas

GTTNo96

Sabine Pass exports

Hoegh Giant

4.2017

170,000

Höegh LNG

Hyundai

Quantum Power

GTTMkIII

Tema FSRU

JS Ineos Independence

4.2017

27,500

Evergas

Sinopacific

Ineos

Type C

Ethane service

Engie Zeebrugge

4.2017

5,100

Fluxys/Gas4Sea

Hanjin

Engie

Type C

Zeebrugge bunkering

Hyundai Princepia

5.2017

174,000

Hyundai LNG

Daewoo

Kogas

GTTNo96

Sabine Pass exports

SM Seahawk

5.2017

174,000

Korea Line

Daewoo

Kogas

GTTNo96

Sabine Pass exports

JS Ineos Invention

5.2017

27,500

Evergas

Yangzijiang

Ineos

Type C

Ethane service

Cesi Beihai

6.2017

174,000

CESI/MOL

Hudong

Sinopec

GTTNo96

APLNG exports

Cardissa

6.2017

6,500

Shell

STX

Shell

Type C

Rotterdam bunkering

Hyundai Peacepia

6.2017

174,000

Hyundai LNG

Daewoo

Kogas

GTTNo96

Sabine Pass exports

Prelude

6.2017

220,000

Shell

Samsung

Shell

GTTMkIII

Prelude FPSO

Seri Cempaka

7.2017

150,000

MISC

Huyundai

Petronas

Moss

Petronas projects

SK Audace

7.2017

180,000

SK Shipping/ Marubeni

Samsung

Total

GTTMkIII

Ichthys exports

Asia Venture

7.2017

160,000

Chevron

Samsung

Chevron

GTTMkIII

Gorgon exports

Caribbean FLNG

7.2017

16,100

Exmar

Wison

TBC

Type c

FLRSU; open

Coralius

7.2017

5,800

Sirius/Veder

Royal Bodewes

Skangas

Type C

N Europe bunkering

Cesi Tianjin

9.2017

174,000

CESI/MOL

Hudong

Sinopec

GTTNo96

APLNG exports

Pan Asia

10.2017

174,000

CNOOC/CLNG/TK

Hudong

Shell

GTTNo96

QCLNG exports

MOL FSRU Challenger

10.2017

263,000

MOL

Daewoo

Botas

GTTNo96

Turkey FSRU

LNG World Shipping, data as of 16 August 2017

LNG NEWBUILDING ORDERBOOK BY YARD OF BUILD Total number of vessels on order = 124 vessels

Samsung

Hudong

• Keppel • Wison

Kawasaki Imabari

1 44

Daewoo

www.lngworldshipping.com

Hyundai

Mitsubishi

6 4

• China Merchants • Cosco Dalian • Hyundai Mipo • Neptun • Ningbo Xinle • Qidong Fengshun

JMU

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40 | VIEWPOINT

Six FLNG projects, four financing models If all things go to plan for the sponsors of the Fortuna project in Equatorial Guinea, by year-end a sixth floating liquefaction project should have completed its fundraising, writes Melanie Lovatt

Melanie Lovatt

ortuna LNG should be the second floating LNG (FLNG) venture to reach a final investment decision this year, following Eni’s Mozambique FLNG project Coral South FLNG, approved in June. These projects, and the four that have so far completed their funding, reveal the diverse financing models supporting this nascent sector. Malaysia’s Petronas shipped the first cargo from 1.2 million tonnes a year (mta) PFLNG Satu in April, having financed its unit from its own resources. Shell took the same route, using its balance sheet to finance Prelude FLNG, the largest floating offshore structure ever built. Prelude, which displaces 600,000 tonnes with its tanks full, reached northwest Australia in July. Golar LNG attracted US$960M worth of funding in July 2015 for the 126,200 m3 Hilli Episeyo from China’s CSSC (Hong Kong) Shipping Co. CSSC provided the funds in a sale and leaseback structure. It cost some US$1.2Bn to convert 42-year-old LNG carrier Hilli into an FLNG unit at Singapore’s Keppel yard. Hilli Episeyo left Singapore, destination Cameroon, in October. With Fortuna LNG, financing for the converted Golar LNG carrier Gandria will also come from a China-backed sale and leaseback structure. The project costs some US$2.1Bn, with about US$1.2Bn to be debt financed. The vessel is estimated to cost US$1.5Bn, with the upstream costs making up the remainder. Gandria costs more than Hilli Episeyo, being equipped for harsher conditions, in a more open marine environment. Increasingly, LNG shipowners have turned to Chinese funding, securing sale and leaseback structures to finance LNG carriers, floating storage and regasification units and FLNG units. Exmar’s newbuild 500,000 tonnes a year Caribbean FLNG unit cost US$300M. The Belgian company took the classic route, securing funds from banks and an export credit agency (ECA). It has received

LNG World Shipping | November/December 2017

US$200M from Bank of China, China’s ECA Sinosure and Deutsche Bank. This vessel has yet to be fixed. Finally, the 3.4 mta Coral South project, valued at US$8Bn, has taken a financing route common for large-scale projects. Using a project finance structure, it received debt funding in May of US$4.7Bn from international banks and ECAs. Project finance structures are common in liquefaction projects that cost billions of dollars. However, Coral South is the first FLNG project to use this structure.

Future finance

Financing for future FLNG projects will reflect the size of the project and the type of sponsor. Gas majors are likely to turn to classic project finance, like Eni, or to use their balance sheets, like Petronas and Shell. Everything depends on: • The strength of a company’s balance sheet and whether it has partners. • The location of the project. • Company preference. Projects using a vessel leased from a shipping company could continue to secure finance via sale and leaseback structures from Chinese providers, which often provide higher leverage than commercial banks and ECAs. The financing could apply to the vessel only, as with Hilli, or to the vessel and other parts of the project, as with Gandria, where part of the upstream is being financed. We will have to wait and see whether tried and tested patterns emerge, or whether the next generation of FLNG projects embraces new funding methods. And, of course, as with landbased projects, difficult market conditions have led to many FLNG projects delaying their final investment decisions. LNG Melanie Lovatt is finance advisor at the Business Intelligence division of Poten & Partners, based in Cyprus. A version of this article appeared in Gastech Insights

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