SK E&S

SK E&S Set to Launch Korea’s First Private-Sector LNG carrier to Transport Shale Gas

- The 299m long carrier with load capacity of 180,000㎥ is the largest among LNG carriers navigating through the Panama Canal
- Starting from the first half of the next year, the carrier will play a leading role in importing U.S. shale gas to Korea, contributing to the nation’s energy security
 

Korea’s first private-sector LNG carriers that will transport shale gas produced in the U.S. will set sail shortly.
 
SK E&S (CEO and President Yu Jeong-Joon, www.skens.com) unveiled the LNG tankers under trials at a shipyard of Hyundai Heavy Industries in Ulsan on April 17.
 
The carriers completed by SK E&S - Prism Agility and Prism Brilliance- will be christened at the end of April before they begin operation officially.
 
Currently, 27 Korean flag LNG carriers are carrying LNG imported by Korea Gas Corporation (KOGAS). SK E&S said it is important to note that the company’s LNG fleet is Korea’s first carriers to transport LNG imported directly by a private company.  
 
It took 3 years to construct the carriers after a charter party agreed with SK Shipping back in May, 2016. Starting from the first half of 2020, they are expected to transport shale gas produced in the U.S. from the LNG liquefaction terminal at Freeport located in Gulf of Mexico.
 
Both of them are membrane-type* vessels, 299 meters long and 48 meters wide. They use natural gas as the main fuel instead of diesel or bunker C oil, and can transport approximately 75,000 tons of LNG at a time and travel at a speed of 19.5 knots (36km per hour). Membrane-type LNG carriers are built by installing insulation materials and tanks directly on hulls, which enables the carriers to transport more LNG than other types of same-sized ships and offer high performance as their physical characteristics minimize effects of winds.
 
The vessels also minimize the LNG evaporation rate to 0.085 per day by adopting the latest cargo hold technology known as GTT Mark III Flex. With the latest engine offering excellent fuel efficiency mounted, they can be monitored from land through a smart ship solution and effective operation can be promised.
 
SK E&S said that the construction of the two carriers was also meaningful in that it completed the midstream components in its LNG value chain.
 
An LNG value chain is a series of processes to produce and transport natural gas to the final consumption stage and consists of 3 stages; the upstream stage focuses on developing gas fields and producing gas, gas is liquefied in the midstream stage and lastly the downstream stage is about delivering to end users such as power stations.
 
SK E&S has long been committed to establishing a LNG value chain. For example, in the upstream sector, the company signed a long-term supply contract for natural gas in Tangguh, Indonesia in 2005 and invested in Caldita-Barossa Gas Field in Australia in 2012 and in Woodford Gas Field in the U.S in 2014. For downstream sector, the company is running 4 power plants across the country including Gwangyang Natural Gas Power Plant which started operation in 2006, Paju Natural Gas Power Plant, Hanam Cogeneration Power Plant and Wirye Cogeneration Power Plant. 
 
The midstream sector was substantiated with the operation of Boryeong LNG terminal in 2017 which the company jointly invested in with GS Energy. The recent construction of the two LNG carriers will help make the midstream part more competitive as the terminal completes all necessary infrastructure where imported liquefied natural gas now can be transported to, stored and regasified before being supplied directly to where it is needed.
 
SK E&S’ import of U.S. shale gas is expected to contribute to national energy security since it can help diversify import sources of natural gas which have disproportionately concentrated on the Middle East and Southeast Asia. At present, it is acknowledged that countries in the Middle East and Southeast Asia, Korean’s major import sources of LNG, present heightened political and geopolitical risks as well as unfair terms and conditions including the destination clause.
 
In contrast, import of the U.S. LNG offers benefits as it is free from the risk of unfair clauses that put buyers at a disadvantage, and especially it is not affected by persistently high oil prices, eliminating unreliability from price fluctuation.
 
The order from SK E&S for the carriers was made in 2016 when the shipbuilding industry was suffering from noticeably slow business evidenced by orders of only 7 new ships that year. Against this backdrop, the company’s order for new buildings itself grabbed the attention of the industry. With the increasing global demand for LNG and tougher environmental regulations in place, the shipbuilding industry has started to receive more orders with increasing orders for LNG carriers lately. The industry expects that global orders for new buildings will increase to a more than 100 LNG carriers including Qatar’s new order for up to 60 vessels by 2020.
 
Park Hyung-il, Director of SK E&S LNG Business Division, said, “the construction of the LNG carriers demonstrates that SK E&S now is able to transport LNG on its own, strengthening its presence as a global LNG company.” He added, “Import of the competitive U.S. shale gas will help us do our part in contributing to the country’s energy security.”