Shanghai unit of CSSC to manufacture LNG vessels for Middle Eastern nation

China State Shipbuilding Corp, the world's largest shipbuilder, on Wednesday inked a 20 billion yuan ($2.8 billion) deal to supply liquefied natural gas tankers to Qatar Petroleum, the world's largest LNG supplier, the biggest export deal in China's shipbuilding sector.

The Chinese State-owned conglomerate, popularly known as CSSC, said the tankers would be built by Hudong-Zhonghua Shipbuilding, its unit in Shanghai.

The deal was finalized on Wednesday afternoon via teleconferencing and was attended by CSSC executives in Beijing, Hudong-Zhonghua Shipbuilding managers in Shanghai and leaders of Qatar Petroleum in Doha, capital of the Middle Eastern nation. Hudong-Zhonghua Shipbuilding said it will construct the "G4+Changhui" LNG carriers, which are capable of carrying 174,000 cubic meters of LNG and are characterized by their high speed, low fuel consumption and light weight.

According to Song Wei, chief expert for LNG carriers at Hudong-Zhonghua Shipbuilding, the G4+Changhui model adheres to the strictest global environmental protection standards and is compatible with the various types of LNG facilities at more than 100 major ports in the world.

The contract is a testimony to the strong capability of China's shipbuilding industry and will support the transformation of advanced marine equipment manufacturing, said a statement from CSSC. The company, however, did not disclose the exact number of ships it would build for Qatar Petroleum.

The Qatari energy giant had in April 2019 floated tenders for the reservation of ship construction capacity for more than 100 LNG carriers. The CSSC seized the opportunity and requested China Shipbuilding Trading, its international trade wing, to participate in the fierce bidding. Before the contract was agreed upon, the Chinese and Qatari sides held four rounds of talks, CSSC said.

Lei Fanpei, chairman of CSSC, said at the signing ceremony in Beijing that the global energy market has been witnessing turbulence due to the novel coronavirus outbreak. Qatar Petroleum's decision to start the shipbuilding program will help stabilize the international energy sector, he said. At the same time, the CSSC will showcase the project as a shining example of cooperation in the global energy industry.

Lei said both sides will further strengthen their collaboration and make bigger contribution to the global energy market, the Belt and Road Initiative as well as bilateral ties.

Qatar's Minister of State for Energy Affairs Saad Sherida Al-Kaabi, who is also Qatar Petroleum's president and CEO, said during the ceremony in Doha that China and CSSC are central to materializing Qatar's plan in the energy supply chain and also are strategic partners.

"I am convinced that through the efforts and cooperation from both sides, our relations will reach a new high and we will better meet China's increasing demand in energy, especially LNG," he said.

Chen Jianliang, chairman of Hudong-Zhonghua Shipbuilding, said in Shanghai that many top-tier shipyards in the world were in the fray for the Qatari project.

Hudong-Zhonghua Shipbuilding is a leading manufacturer of LNG tankers and is one of the 13 shipbuilders in the world capable of making such vessels, said Chen. He said his factory has manufactured and delivered 21 LNG tankers to users who are using them to transport fuel from around the world to China.

The Shanghai shipbuilder said in April 2019 that it had started working with the Norway-based internationally accredited registrar and classification society DNVGL on the research and development of the world's largest LNG carrier with a capacity of 270,000 cubic meters, which will be tasked with handling the rising demand for clean fuel in China.