Shanghai shipyard signs deals for US$1b

PUBLISHED : Monday, 18 July, 2011, 12:00am
UPDATED : Monday, 18 July, 2011, 12:00am


Four ship-building contracts worth up to a combined US$1 billion have been signed between Shanghai's Hudong-Zhonghua Shipbuilding and joint venture companies formed by Japan's Mitsui OSK Lines and China Shipping Development.

The contracts are to build four liquefied natural gas (LNG) carriers.

No details were given about the price of the ships, which can each carry 172,000 cubic metres of LNG, but ship brokers said they expected the vessels to cost about US$200-US$250 million each.

The deal is the first major export order for LNG carriers for the Shanghai shipyard, controlled by China State Shipbuilding Corporation. It also marks a significant milestone for China Shipping to diversify into sophisticated LNG transport.

The formal signing of the contracts follows the inking of a project development agreement and preliminary shipbuilding deals in Beijing in January.

Speaking at the time, Mitsui OSK chairman Akimitsu Ashida, said the agreement marked a first for MOL to secure LNG ships in China ' and we believe that with concerted efforts by all the parties concerned, the objective of this project will be accomplished in a professional manner'.

Tan Zuojun, president of China State Shipbuilding, said the group was pleased to be selected by ExxonMobil and MOL as a partner in the project. 'We'll work diligently to design, build and deliver four high quality LNG carriers,' he said.

The partners had spent the past six months agreeing on the final design, cost, financing and associated details of the order before Friday's final contract signing.

Some 70 per cent of the cost of the ships, which will be used to transport LNG from Australia and Papua New Guinea to China, will be financed by Mitsui OSK Lines with the balance coming from China Shipping.

A financing package has already been agreed with Japanese bank, Sumitomo Mitsui Banking Corporation. Two of the ships will be operated by Mitsui OSK Lines and East China LNG Shipping Investment, while the other two will be operated by MOL and North China LNG Shipping Investment.

East China LNG Shipping is a joint venture between China Shipping Development and Sinopec, while North China LNG Shipping has been formed by China Shipping Development and China National Petroleum Corp (PetroChina).