China is quickly closing in on Korea in the liquefied natural gas (LNG) carrier market. After taking over the general commercial ship market such as oil tankers, it is also growing its presence in high-difficulty advanced vessels.
LNG carriers are a representative high value-added ship type where Korea still holds an edge, even as China sweeps up new shipbuilding orders. But China's share of LNG carrier orders has risen from the 10% range in 2021 to the 30% range recently, heightening a sense of crisis in Korea's shipbuilding industry.
According to the shipbuilding industry on the 21st, Abu Dhabi National Oil Company (ADNOC) of the United Arab Emirates (UAE) recently placed an order with a Chinese shipyard for four LNG carriers worth $900 million (about 1.34 trillion won).
The shipbuilding industry had expected Korea to win this project. Just before signing with China, ADNOC visited Korea to discuss cooperation in shipbuilding.
Kim Dong-Kwan, vice chairman of Hanwha Group, met privately with Sultan Ahmed Al Jaber, UAE Minister of Industry and Advanced Technology and ADNOC chief executive officer (CEO), at the Four Seasons Hotel Seoul on the 8th. It was reported that they met again about half a year after last December to discuss cooperation in the energy sector.
CEO Al Jaber also met with Kim Jung-kwan, Minister of the Ministry of Trade, Industry and Resources, to discuss energy projects such as building a crude oil security cooperation system and expanding crude oil and gas storage and transport facilities.
However, Al Jaber then flew to China and attended a signing ceremony on the 10th to order the construction of four LNG carriers. ADNOC L&S, ADNOC's shipping and logistics subsidiary, awarded the work to Jiangnan Shipyard under state-owned China State Shipbuilding Corporation (CSSC).
The ordered vessels are large LNG carriers with a capacity of 175,000 cubic meters (LNG cargo tank volume). The total contract amount is $900 million, with a per-vessel price of about $225 million. The ships are scheduled for delivery in 2029.
News of the contract drew concern in and outside Korea's shipbuilding industry. While these ships are likely to be used for China's LNG imports, there is wariness that Chinese shipyards are narrowing the gap with Korea as they build up experience.
Jung Yeon-seung, an analyst at NH Investment & Securities, said, "An uncomfortable development is unfolding for Korea's shipbuilding industry." Jung said, "It remains true that Korea still has an advantage in terms of quality," adding, "It's becoming increasingly uncomfortable because China keeps gaining opportunities to build experience and, by doing so, will catch up with Korea."
ADNOC is a UAE state-owned energy corporations focused on crude oil and natural gas exploration, production, refining and trading. It is expanding its LNG business to move away from oil dependence and target growing global LNG demand.
ADNOC plans to more than double its annual LNG production capacity from 5.8 million tons (t) to about 15 million t when the Ruwais LNG project under construction begins operations in 2028. The company's goal is to handle 47 million t of LNG annually by 2035.
ADNOC is expanding its transport fleet in step with increased LNG exports. Including the four newly ordered vessels, ADNOC has ordered a total of 18 LNG carriers since 2022.
After ordering six LNG carriers from Jiangnan Shipyard in 2022, ADNOC ordered four each from Hanwha Ocean and Samsung Heavy Industries in 2024. By choosing Jiangnan Shipyard again this time, Jiangnan has secured a total of 10 orders from ADNOC.
The shipbuilding industry is watching the trend of overseas shipowners increasing LNG carrier orders at Chinese shipyards. China's share of LNG carrier orders has risen from about 12% in 2021 to the 30% range recently.
Among Chinese corporations, Hudong–Zhonghua Shipbuilding under CSSC and Jiangnan Shipyard are currently dividing China's LNG carrier market. Hudong–Zhonghua Shipbuilding built China's first LNG carrier and, boosted by the Qatar boom, has rapidly grown to compete with Korean shipbuilders.
As a latecomer, Jiangnan Shipyard is expanding its foothold in LNG carriers by securing shipowners from various regions, including UAE's ADNOC and Greece's TMF Cardiff Gas.
Yang Jong-seo, a senior researcher at The Export-Import Bank of Korea's Overseas Economic Research Institute, said, "For LNG carriers, the technological barriers are high for cargo tanks (equipment that stores and transports natural gas as a cryogenic liquid), and it is clear that Korea holds a technological edge. But recently Chinese shipyards have built many and have accumulated capability and credibility," adding, "If (China's) quality roughly aligns, competition will shift to price, and then China will inevitably have the advantage."
Ryu Min-cheol, a professor at Korea Maritime and Ocean University, said, "Chinese shipbuilders have enhanced their technological prowess through France's GTT, which holds LNG cargo tank licenses, and international classification societies that conduct supervision," adding, "Since costs are increasingly unfavorable to Korea, we need to invest more in advanced technologies such as automation to prepare for the future."