LNGC on US Export Boost

qinxingchen

Korean Big3 builders are expected to have benefit from US approval of additional liquefied natural gas (shale gas) export since it would eventually boost new orders for LNG carriers. Analyst Jun Jae-Chun, Daishin Securities of Korea, has said that a report on the impact of LNG export on American market was published on December 5, 2012 and added, “The US Department of Energy is expected to approve LNG export during March-April after examining and reviewing the issues by February 22, 2013.” As of the end of February, there was a request to export a total of 225.6m tons of LNG in the US and of which around 55m tons were said likely to be permitted. Analyst Jun prospected, “Considering when the US starts LNG exports, preparation for LNG-carrier orderings will begin from the mid 2013, which will be firmed up at the end of 2013 or during the first half of 2014.” A maximum of 49.7m tons of accumulated export is expected to be approved by April and of which 36.3m tons were decided importers, which accounting for 73%. Of the settled 36.3m tons, 10.3m tons (19 LNG carriers will be demanded) are expected to be constructed by Japanese yards and 26m tons (38 LNG carriers, 67% of market share) by Korean yards. In terms of projects to be additionally approved from March to April, the weighted proportion of LNG import by Japan would resulted in Japanese shipbuilders winning more newbuilding LNG-carrier orders for additionally approved projects. Japan’s importing 14.7m-ton LNG will need 27 LNG carriers and considering Japanese yards’ annual shipbuilding capacity, 19 vessels are expected to be built by Japan while eight by Korean yards. The analyst said that the market share of Korean shipyards, in current orderbook terms, is expected to fall from 78% to 70%. He also pointed out, “The most notable feature of order contracts in the first half of 2013 is the recovery of commercial ship order (containership and LNG carrier), amid firm orders for offshore plants.” He added, “Beneficiaries of increasing orders for LNG carriers will be three large-sized builders in Korea.” “In the Big3’s expected contracts for 2013, LNG carriers (FSRU included) are to account for 15%.” Analyst Jun chose Daewoo Shipbuilding & Marine Engineering of Korea as a Top Pick since it currently tops in low speed engine segment, having LNG carrier’s propulsion system with growing demand. Published : March 6, 2013