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China Pushes to Build Its Own Ships to Deliver Gas

SINGAPORE — Chinese shipyards are seeking to take about $10 billion in orders for new liquefied natural gas tankers over the rest of the decade, part of a plan to restructure the country’s ailing shipbuilding sector and secure China’s energy supply chain.

China’s push to build its own natural gas delivery vessels will increase its capability in high-tech shipbuilding and challenge South Korean and Japanese shipyards, which have been the main suppliers of large gas tankers for 30 years.

As many as 50 tankers, or more than 20 percent of the 225 liquefied natural gas vessels expected to be added worldwide by the end of 2020, are expected to be built in China to deliver gas to its ports, according to estimates from the American Bureau of Shipping, a ship safety society.

China’s reliance on vessels built at home for gas deliveries — which China needs to serve new import terminals — would give it greater control over its supply chain and a bigger share of the high-value end of shipbuilding.

“Regardless of the availability in the market for L.N.G. carriers, China will ship the bulk of its cargoes through its own project-dedicated vessels,” said Andrew Bridson, business development manager at the transport and energy consultant BMT Asia Pacific in Singapore.

The global shipping industry is emerging from a five-year downturn, the worst in 30 years, and China, the largest shipbuilding nation and long the leader in basic vessels, sees an opportunity in developing the skills and technology to build more sophisticated ships.

Beijing laid out a plan last year for domestic shipyards to seek a quarter of the global market for high-tech ships, including L.N.G. tankers.

“In future, our output is going to outstrip that of Japan and Korea,” said Yang Baohe, principal naval architect at the Marine Design and Research Institute of China, a subsidiary of the China State Shipbuilding Corporation.

More than 70 percent of about 125 L.N.G. carriers and storage vessels on order have gone to South Korean shipyards like Daewoo Shipbuilding and Marine Engineering, and Samsung Heavy Industries.

But those orders represent only a little more than half of the total investment of nearly $50 billion needed to expand the global L.N.G. fleet of 394 vessels, based on an average gas tanker cost of $200 million and estimates by the American Bureau of Shipping.

As more L.N.G. plants start up in the United States, Australia and Russia to feed Asia’s voracious gas demand, 100 more ships are expected to be ordered for delivery from 2017 to 2020, according to shipping analysts and consultants.

China, which is under pressure to switch from coal to cleaner fuels to cut carbon emissions and clean its polluted air, plans to more than double its total gas supply by 2020 and is seeking to triple its L.N.G. imports to about 60 million tons, or about 82 billion cubic meters.

This second wave of gas tanker orders will give relative newcomers, like Hudong-Zhonghua Shipbuilding of Shanghai and the Dalian Shipbuilding Industry Company, a chance to penetrate the L.N.G. sector further by building more vessels for China.

Last year, six tankers constructed by Hudong-Zhonghua accounted for half of China’s L.N.G. imports, the rest coming on ships chartered to carry gas from producers including Qatar and Indonesia.

Hudong-Zhonghua, owned by C.S.S.C., has in hand contracts to build 14 ships to transport L.N.G. from Papua New Guinea and Australia to China. Dalian Shipbuilding, also part of the C.S.S.C., is negotiating to build four ships costing up to $230 million each.

China needs to put about $9 billion to $10 billion into expanding its fleet, said Bill Sember, vice president of global gas development at the American Bureau of Shipping.

Still, Chinese shipyards are not likely to start winning orders for projects outside China anytime soon, according to the South Korean rival Samsung Heavy, which says the companies lack the experience to win over international buyers.

“Chinese shipbuilders are winning L.N.G. carriers for only local import projects,” said Choe Young-keun, an executive on the marketing planning team at Samsung Heavy. “That trend will not be changed, because Hudong-Zhonghua is the only Chinese shipbuilder which has a track record of L.N.G. carrier construction.”

A version of this article appears in print on   of the National edition with the headline: China Pushes to Build Its Own Ships to Deliver Gas. Order Reprints | Today’s Paper | Subscribe

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