QatarEnergy and Hudong-Zhonghua Finalize Agreement for Massive LNG Carrier Deal

State-owned LNG powerhouse QatarEnergy has entered into a shipbuilding agreement with China's Hudong-Zhonghua for the construction of eight Q-Max LNG carriers, marking a significant expansion of its shipbuilding program. These colossal vessels, boasting a capacity of 271,000 cubic meters each, are slated for delivery in 2028 and 2029. While the financial details of the deal remain undisclosed, industry estimates suggest that each Q-Max vessel could be valued at over $300 million.

In its quest to bolster its LNG carrier fleet, QatarEnergy sought to commission Q-Max LNG carriers from shipyards in both China and South Korea. The current market rates for standard LNG carriers stand at over $235 million in China and around $265 million in South Korea. Notably, vessels procured earlier under the ongoing shipbuilding program secured bookings below prevailing market prices.

The recent deal with Hudong-Zhonghua follows QatarEnergy's 2020 agreement with the Chinese shipbuilder to reserve LNG ship construction capacity for its future carrier fleet, encompassing the North Field expansion initiatives. In April 2022, QatarEnergy inked charter agreements with Japan's MOL for four Hudong-Zhonghua LNG carriers, marking the initial batch of contracts under its extensive shipbuilding program.

Expanding on these developments, QatarEnergy subsequently signed additional charter agreements, including three carriers with MOL and five LNG carriers with a consortium comprising Japan's NYK and K Line, Malaysia's MISC, and China LNG Shipping. With the addition of the eight Q-Max carriers, Hudong-Zhonghua's total contribution to the shipbuilding program reaches 20 LNG carriers.

Hudong-Zhonghua achieved a milestone in September of the previous year when it secured approvals in principle from classification societies for what it claims to be the world's largest LNG carrier. This massive vessel, with a capacity of 271,000 cubic meters, spans 344 meters in length, 53.6 meters in width, and features advanced technologies, including dual-fuel propulsion, a reliquefaction system, an air lubrication system, and GTT's NO96 Super+ containment tech. Despite its size, the vessel can navigate over 70 LNG terminals along the primary trade route.

Currently, Qatar's Q-Max vessels, measuring around 345 meters in length with a capacity of 263,000-266,000 cubic meters, hold the title of the world's largest LNG carriers. Nakilat, Qatar's shipping company, owns 14 Q-Max LNG carriers transporting LNG from the Ras Laffan LNG complex to customers worldwide.

QatarEnergy, formerly known as Qatargas, currently operates 14 LNG production trains with a capacity of approximately 77 million tons per annum (Mtpa) in Ras Laffan. The North Field expansion project's first phase aims to boost Qatar's LNG production capacity from 77 to 110 Mtpa, with further capacity reaching 126 Mtpa in the second phase. To support these endeavors, QatarEnergy has also secured LNG carriers from South Korea's Samsung Heavy, HD Hyundai Heavy Industries, and Hanwha Ocean.

Under the initial phase, QatarEnergy contracted 60 LNG carriers from these shipbuilders. In the second phase, it signed a deal for 17 LNG carriers with HD Hyundai Heavy Industries, totaling approximately $3.9 billion. This equates to a per-vessel cost of around $229 million, a notably lower figure compared to the prevailing average price for newbuild LNG carriers in South Korea. QatarEnergy is anticipated to announce additional contracts under its ongoing shipbuilding program throughout the year.