Maritime News 2012 - Third in February

[쁘띠메종]

Dear Ladies and Gentlemen,

Good Evening. Today I am also grateful to the friends’ email reply.

This information seems to have benefits for most of my friends. But if you do not need this information, please tell me I will delete from the list of my recipients.

Anyway, today also I was prepared the maritime news as a third in February as follows. I hope that is very helpful to your business.
 
1.    Korea to order LNGC
 
As the Korea Gas Corporation (KOGAS) contracts long-term LNG purchases recently, around ten LNG carrier new buildings, at most, are expected to be placed at South Korean yards.

Existing one to two LNG carriers can carry about yearly 3.5m ton of liquefied natural gas from GLNG project of Australia, however, the number of LNGC would be adjusted according to route transporting yearly 3.5m-ton from the US' Sabine Pass project.

As of today, about eight to ten additional LNGCs are to be needed, however, having enough time before a full-scale operation around 2015-2017, new building securement, size, etc., would be decided in the end of 2013.

KOGAS is understood to charter about 23 LNG carriers in long-term contract and has pushed forward Korean-flagged LNGC project to foster Korean shipbuilding and shipping companies. It has been operating Korean vessels in LNG transportation since 1994, having ordered a total of 21 vessels at domestic shipbuilders up till now. The ships have transported LNG from six countries, including Indonesia, Malaysia, Qatar, Oman, Russia and Yemen.

Through the project, KOGAS is flexible in additional service as well as has boosted Korean shipbuilding industry.

Moreover, many are strongly requesting new building placement at Korean shipbuilders as Korea and China are in keen competition for buying GTT of France, recently.
In particular, this would be necessary to give opportunities to Korean shipbuilders to construct LNG carrier with their self-developed LNG cargo containment system and enable them to expand overseas market, as well as to decrease patent fees flowing out overseas.
 
2. Fredriksen plans VLCC-PC orders
 
The Norway-born shipowner has outlined audacious plans to invest hundreds of millions of dollars in newbuild VLCCs, in defiance of currently troubled market conditions.

John Fredriksen believed that the market would not return to balance until at least 100 of the 570-strong existing fleet of VLCCs had been scrapped.

However, he hopes to take advantage of low new building prices and fuel-efficient ship designs, saying “We’re looking to build new VLCCs. At today’s bunker prices, we’ll save $10,000 a day. We’ve been offered new buildings down to $85m, so the risk is at least at less cost," in an interview with Financial Times.

According to Fredriksen, he was unsure how the VLCC orders would be financed, however, the orders would be substantial and placed at the end of 2012.

Meanwhile, he revealed that his flagship company Frontline 2012 was in the course of placing its first orders – for 10 new medium-range tankers.

Mr Fredriksen had “some belief” in the product tanker market because the shift of world oil refining capacity to India and the Middle East would create demand for the vessels to take products to the main consumer economies.

Sources said that new building MR tanker would cost about $33m each with deliveries in 2013-2014, then to join Frontline 2012. Also forecast that STX Offshore & Shipbuilding (Jinhae yard) of South Korea would be the winner of this contract, however, Fredriksen insists that he is talking to several contenders — mostly Korean.
 
3. PANASIA inks De-NOx SCR
 
A South Korean marine equipment maker PANASIA, specialized in eco-friendly products such as Ballast Water Management System, announced that it successfully self-developed PaNOx™, a De-NOx SCR system, in accordance with UN's Green House Gas policy.

PANASIA has completed 10 patent applications and trademark registration to four countries since 1999. Also, PANASIA has been confirmed for its distinguished products by being certified NeT (Technology certification) and NeP (New product certification by delivery) from the Ministry of Knowledge Economy.

PANASIA has successfully completed delivery and trial run for a total of seven PaNOX™ for the US' onshore power facility, boiler, gas turbine, etc, where the government has tightened regulation on nitrogen emission.

Moreover, environmental policy expands into Middle East plant industry and PANASIA already delivered to diesel generator of SPGD 12 project in Iran and contracted for Yanbu Project of Saudi Arabia.

With technical development support from the government, PANASIA developed marine four-stroke diesel engine De-NOx SCR System and plans to deliver it to be equipped in the platform supply vessel in August.

Meanwhile, PaNOX™ has been designed to minimize the space in ships with knowhow from onshore facility.
 
4. Daewoo new repair yard in North Korea
 
Daewoo Shipbuilding & Marine Engineering of South Korea is known that it plans to construct a new ship repair yard in Hwang Geum Pyung, an exclusive industrial zone in North Korea, with a joint investment from Chinese group.

Daewoo announced on 10 February that the joint venture with Liaoning Rilin Construction (Group) would build a shiprepair yard, steel-structure facility, etc., in Hwang Geum Pyung and Dandong of China, saying "The final announcement would be made in April after negotiation of investment and the date of the start, etc., with Rilin, and a vote by the board of directors."

The island Hwang Geum Pyung is bordering with Dandong, Liaoning in China, and North Korea and China began a joint development of the exclusive industrial zone, after a ground-breaking ceremony in June 2011.

Meanwhile, Daewoo and Rilin have signed a memorandum of understanding on shiprepair business and wind power/nuclear power business in January 2011.
 
5. Brazil shipbuilding pains
 
Brazil’s shipyards were once among the world’s largest before falling into decline in the 1990s. The renaissance, however, is encountering growing pains as old shipyards are restored and new ones are carved out of the country’s rugged coastline.

Brazil’s shipbuilding industry marked its return from a 14-year hiatus last month, delivering the first of what’s expected to be hundreds of offshore supply vessels, tankers, drilling rigs and oil platforms to federal oil company Petroleo Brasileiro.

But there are concerns that current capacity won’t be able to meet demand, which could cause Brazil’s dream of turning into one of the world’s top four crude-oil producers to founder.

Petrobras, as the state-run energy giant is known, expects crude oil output to more than double from current levels to reach 4.9 million barrels a day by 2020. Not only is the scale daunting, but so is the complexity. About half the output will come from the “presalt,” an ultradeepwater region that could hold as much as 50 billion barrels of oil equivalent buried under a layer of salt more than four miles below the seabed.

“Given the sheer scale of these presalt developments and the current lack of shipyard capacity in Brazil, project delay is a very real risk,” said Ruaraidh Montgomery, senior analyst for Latin America upstream research at Wood Mackenzie. “We believe that the ramp-up in output will be slower than Petrobras anticipates.”

Shipbuilders such as Singapore’s Sembcorp Marine and OSX Brasil, of Brazilian billionaire Eike Batista, have plans to build new yards. And Carlos Rocha, an associate director at the Rio de Janeiro office of Cambridge Energy Research Associated, said they should be able to meet demand for large vessels such as tankers, drilling rigs and production platforms.

Even so, analysts said there are bound to be hitches as the shipyards get up to speed.

“This is not unexpected given that most of the shipbuilding facilities involved are brand new. It is quite common for first vessels to suffer long delays due to production problems being ironed out before a yard gets into its stride,” said Robert Wilmington, lead analyst on new construction at London-based IHS Fairplay, in an email.

One of the newest shipyards, Estaleiro Atlantico Sul, or EAS, began building its first ship, a tanker for Petrobras distribution unit Transpetro called “Joao Candido,” while it was building the yard itself.

The ship took 50 months to build and cost $180 million, nearly five times longer and three times more expensive than the international standard, according to Credit Suisse analyst Emerson Leite. The delay will likely push back all of EAS’s orders, which include 22 tankers, seven drilling rigs, the P-55 platform hull and top-side finishing for the P-62 platform.

“We think cost-overruns and delay implications for a wider range of units are more aggravated considering that oil tankers are inherently less complex than the P-55, P-62 and the seven drilling rigs also on EAS backlog,” Leite said in a recent note to clients. The result is a more difficult environment for Petrobras to meet its future production targets.
 
6. Hyundai books five LNG vessels
 
Hyundai Heavy Industries group recently won a total of five LNG vessels, valued at $1.1bn.

Hyundai HI signed a contract for one LNG-FSRU with Höegh LNG of Norway on 13 February and back on 8 Feb, it booked two 162,000-cbm LNG carriers from European shipowner.

Hyundai Samho Heavy Industries also secured two new building 162,000-cbm LNG carriers from Golar LNG of Norway on 10 Feb. The contract includes two optional LNG carriers as well.

Recently contracted membrane LNG carriers are dual-fuel electric propulsion vessels, which are scheduled to be delivered from the second quarter 2014 to the first half of 2015, one by one.

Meanwhile, Hyundai set up a target to win $24bn in Shipbuilding, Offshore & Engineering and Industrial Plant & Engineering divisions, including Hyundai Samho in 2012, well over $20.1bn signed last year.
 
7. STX pens 15 ships
 
STX Offshore & Shipbuilding sealed successive contracts in 2012.

STX contracted for two new building 170,200-cbm LNG carriers with Sovcomflot and six 50,000-dwt MR tankers with John Fredriksen Group, announced on 10 February.

New building prices for LNG carrier and tanker cost $200m and $35m apiece, respectively, which totals in the excess of $600m.

Meanwhile, Sovcomflot exercised the first optional two new building LNG carriers, which have been contracted in 2011 for 2+4 LNG carriers. The second optional two vessels are now left behind waiting for coming into effect.

Also, additional four 50,000-dwt MR PCs have been option contracted.

In particular, the 170,200-cbm LNG carrier would be equipped with heat-retaining cargo containment system, which minimize gas evaporation loss and be introduced eco-friendly design, such as high efficiency propulsion system, etc.

President Shin Sang-Ho, STX said, "We will put all our energy in sealing further contracts, in particular, we will enhance competitiveness in high-value vessel."

Meanwhile, STX has secured a total of 15 vessels, totalling $900m year to date, including one 155,000-dwt Dynamic Positioning System 2 shuttle tanker ordered from Greek owner on 31 January and six midsize bulkers.
 
8. Oldendorff back to new order
 
Oldendorff Carriers of Germany is to resume new building investment.

Oldendorff has been gone out of placing new buildings since the last investment in 2005, however, it would resume new order placement any time soon, as decreasing new building price is attractive, said Chairman Henning Oldendorff.

Oldendorff is considering every size from capesize to handysize and the investment would be adjusted to new building price or market condition.

The German shipowner already came back to new building resale purchase in 2011.

Meanwhile, Oldendorff recorded $5bn of turnover last year and continued to make a profit.
 
9. Samho goes into liquidation
 
Samho Shipbuilding, based in Tongyoung, South Gyeongsang Province, South Korea is to undergo liquidation, in the end.

As once a global Top 100 yard, on basis of backlog, having failed to rehabilitate, other Korean small-and-medium yards are worrisome to go bankrupt in a row.

Bankruptcy department of Changwon district court announced on 14 February that it decided to end Samho's court receivership as it saw the yard seemed not likely to rehabilitate.

When the court makes a final declaration of bankruptcy, liquidation procedures would begin.

Cooperative companies which have not been paid construction fee and those who are working in Samho are devastated. An emergency board meeting of cooperative companies are appealing for completing three vessels, now under construction, and reselling, which would minimize damages.

Samho Shipbuilding got into trouble after its mother company Samho Shipping having requested court receivership in April last year and faced with management difficulty, as well as order contract decreased.

The South Korean shipbuilder had been ranked in the world top 100 yards, on the basis of backlog, during 2000s of boom period.

Meanwhile, as other Tongyoung-based 21st Century Shipbuilding and SHINAsb Yard had failed to win additional orders for a long time, it is concerned that the third largest shipbuilding city in Korea, followed after Geojae and Ulsan, would be bombed by shipbuilding market depression.
 
10. Economou wins Chinese loan
 
George Economou’s Cardiff Marine has reportedly clinched a $120m loan from China to finance VLOCs.

The Ningxia branch of China Development Bank Corp (CDBC) has signed up to back three 206,000-dwt bulkers being built at a Shanghai shipyard, the China Business Newswire reported.

Economou-owned Ocean Freight, acquired last November, has five such ships worth $68m each on order at Shanghai Jiangnan Changxing for delivery in 2012 and 2013.

Monaco-based Cardiff unit Classic Maritime has two 206,000-dwt bulkers due from Shanghai Waigaoqiao Shipbuilding in 2013. They were ordered in August, 2010.
 
11. Hyundai 40th Anniversary
 
Celebrating its 40th anniversary, Hyundai Heavy Industries would look back upon the past and will face another 40 years of innovation and challenge with strong will.

The South Korean shipbuilder would express its gratitude to former/current Hyundai family, cooperative companies and customers over the last 40 years and hold various celebrations around its anniversary on 23 March.

Hyundai first set to shipbuilding business at Mipo bay, Ulsan in 1972 and has grown to a global all-around heavy industry corporation, covering shipbuilding, offshore, plant, engine machinery, electro-electricity, construction facility, green energy, etc., with KRW 25trn of turnover.

The Ulsan-based yard is scheduled to have commemorative events, including 40th anniversal ceremony, photo exhibition, concert, 100m-gt delivery celebration, retirees invitation, soccer tournament, etc.

On 8 March, in particular, there would be a celebration for 100m-gt delivery.
 
That’s it for today. Wish you all good health for you and your family.
Thank you for reading to the end and your unwavering love and attention.  I hope that is very helpful to your business.
Hope to see you again soon.

Best regards,

Heun Woo Lee
heunwool@gmail.comORRI Center – DAU