QatarEnergy Set to Secure Deal with Samsung Heavy Industries and Hanwha Ocean in March

Samsung Heavy Industries and Hanwha Ocean are on track to finalize shipbuilding contracts in March as part of QatarEnergy's expanded second phase LNG carrier ordering project. QatarEnergy, the state-run energy company of Qatar, has increased the reserved slots at shipyards, including Samsung Heavy Industries, Hanwha Ocean, and Hudong Zhonghua Shipbuilding, to a total of 40 in the second phase of its LNG carrier ordering initiative.

In this project expansion, Samsung Heavy Industries has secured slots for 15 vessels, while Hanwha Ocean has reserved 12 slots. Hudong Zhonghua Shipbuilding, a Chinese shipbuilder, has entered contracts for eight 271,000 cubic meter Q-Max vessels. This development aligns with Qatar's strategic plan to elevate its LNG production from the current 77 million tons per year to 126 million tons by 2027, necessitating an increase in LNG carrier capacity.

The need for more LNG carriers is particularly crucial for Qatar, the world's largest LNG exporter, as it aims to enhance the efficiency and reduce the cost of transporting cargo. QatarEnergy's decision to invest in Q-Max vessels, which are larger than the standard 174,000 cubic meters, is driven by the potential cost savings associated with increased cargo capacity per vessel.

However, this move poses challenges for Korean shipbuilders who had initially signed slot reservation contracts based on general vessel types. Building Q-Max vessels is more complex due to their larger dimensions; a 174,000-cubic-meter LNG carrier is 299 meters long and 46.4 meters wide, allowing for two vessels to be constructed side by side on a shipyard dock. In contrast, a Q-Max vessel, being over 50 meters wide, cannot be built in parallel with another Q-Max vessel.

Hudong Zhonghua Shipbuilding, though lacking prior experience in constructing Q-Max vessels, has actively pursued orders for them at events like GASTEK 2023 in Singapore since September 2023. The Chinese shipbuilder signed a conceptual certificate for Q-Max vessels with various global classification societies, including DNV, during GASTEK 2023.

The vessels to be ordered this time are expected to have five cargo holds, measuring 344 meters in length, 53.6 meters in width, and capable of carrying 271,000 cubic meters of LNG—more than a 265,000-cubic-meter Q-Max vessel. The cargo holds will feature the same membrane NO96 Super+ technology as those of ships to be built by Hanwha Ocean.

With QatarEnergy's order for Q-Max vessels from Hudong Zhonghua Shipbuilding, Korean shipbuilders may find themselves limited to constructing 174,000-cubic-meter LNG carriers. Despite this shift, Samsung Heavy Industries and Hanwha Ocean are still anticipated to receive orders for vessels at the same level as those in their existing slot reservations from QatarEnergy.

In 2023, HD Hyundai Heavy Industries secured orders for 17 LNG carriers from QatarEnergy, surpassing industry expectations. Some experts suggest that this significant order volume may impact the allocation of orders to Samsung Heavy Industries and Hanwha Ocean. HD Hyundai's contract with QatarEnergy, totaling US$3.9 billion or about US$229.41 million per vessel, is expected to influence price negotiations with Samsung Heavy Industries and Hanwha Ocean as QatarEnergy proposes prices based on its existing contract.