Rongsheng bids for lng carrier deal

China Rongsheng Heavy Industries Group Holdings is vying for a deal potentially worth billions of yuan to build liquefied natural gas tankers as the mainland embarks on a further stage of LNG development.

'We don't know how many ships will be required, but it is going to be a large quantity,' said Sean Wang Shaojian, the company's chief financial officer.

The price of an LNG carrier varies between US$200 million and US$250 million, depending on the specifications and cargo carrying capacity of the ship.

Wang expects the project to start later this year or early next year. He said Rongsheng was one of three shipbuilders shortlisted by the National Development and Reform Commission after top shipbuilders were invited to submit proposals to build LNG carriers.

Dalian Shipbuilding Industry and Shanghai's Hudong-Zhonghua Shipbuilding Group were the other two yards selected by the NDRC. Of the three, Hudong-Zhonghua is the only one to have experience in building sophisticated LNG carriers. It built five 147,000 cubic metre capacity ships to supply terminals in Shenzhen and Fujian with LNG from Australia. Last month, Hudong-Zhonghua also signed a deal worth about US$1 billion to build four 172,000 cu metre capacity LNG carriers for two Sino-Japanese joint ventures after several months of talks. China has about 12 LNG terminals in operation, under construction or planned that would require more than 65 tankers to transport LNG from Australia, the Middle East and elsewhere.

Wang said the proposals submitted by the three shipbuilders each featured a similar sized vessel but with different engine designs. He said Rongsheng proposed a dual-fuel diesel-LNG powered series of gas carriers. The ships will feature a membrane gas containment system used under a patent agreement that was signed with French marine engineering firm Gaztransport & Technigaz. Rongsheng engineers are already in France for training, he said.

Other partners in the venture are Western engine manufacturers MAN and Wartsila, and two ship safety classification societies, the American Bureau of Shipping and Det Norske Veritas.

'We expect a lot of good things to happen - we have to get ready,' Wang said, pointing out that Rongsheng had sufficient capacity to build ships as it had four dry docks at its main yard at Rugao, Jiangsu province.

Wang was speaking ahead of the formal announcement yesterday of further financial support for the shipbuilder from China Development Bank. Under the agreement, the bank will provide 30 billion yuan (HK$36.62 billion) in credit facilities, financial planning and consultancy services to help develop the firm's high-end offshore engineering equipment manufacturing business.

Rongsheng already has credit lines and foreign loans of about 130 billion yuan.

This comes as the shipbuilder is moving into the construction of more complex ships that include large container ships and offshore support vessels.

In May, Rongsheng built a pipe-laying crane vessel for China National Offshore Oil Corp that can lay pipelines in water up to 3,000 metres deep. Chen Qiang, Rongsheng's chief executive, said the ship was the first in the world to lay pipelines at that depth of water.