With LNG ships in high demand, Japanese companies swing into action
TOKYO (Nikkei) -- As demand for liquefied natural gas surges worldwide, so does demand for transporting it, creating an opportunity for Japanese maritime transport companies and shipbuilders to boost their global presence.
Japan's three biggest marine shippers, already operating roughly half the 350 to 360 LNG carriers on the world's seas, will order 90 more vessels by 2020, raising their total by about 50%. Mitsui O.S.K. will expand its fleet to 110 ships from 70 and Nippon Yusen will increase its own to around 100 from 70. Kawasaki Kisen, which operates around 45 ships, will add 20. The added capacity is expected to raise their market share even further, giving them a central role in global LNG shipments.
Already the world's largest importer of LNG, Japan has steadily increased volume for use in fossil-fuel-fired power plants to make up for suspended nuclear plants since the March 2011 earthquake and tsunami. With China, India and other emerging countries boosting imports as well, global LNG shipments, which topped 200 million tons in 2010, are expected to grow around 60% to nearly 360 million tons in 2020.
On the supply side, exports of North American shale gas to Japan are poised to begin as early as 2017, while natural gas development projects involving Japanese companies are making headway in Australia and Mozambique.
The pipeline of massive orders for LNG carriers will be a boon for Japanese shipbuilders, which have lost market share to Chinese and South Korean competitors in recent years. LNG ships carry a price tag of around 20 billion yen ($195 million) apiece, or double that of a regular vessel. Construction costs for the 90 LNG ships are estimated at nearly 2 trillion yen.
Eager to win contracts and gain an edge over South Korean rivals offering low prices, Japanese shipbuilders will tout energy-saving technology and other efficiency features for their ships.
Kawasaki Heavy is developing an LNG vessel that offers transport efficiency, to be commercialized in fiscal 2017. By improving LNG tanks without changing ship size, load volume is increased by 10%. The company will highlight lower fuel costs and other benefits the new vessel offers.
Japan Marine United hopes to nab contracts by playing up its durable tanks that employ proprietary technology.