November 29, 2013 / 7:50 AM / 6 years ago

Japan shippers plan to order 90 new LNG tankers worth $17.6 billion by 2020

TOKYO/SINGAPORE (Reuters) - Japan’s top shippers plan to order around 90 new liquefied natural gas (LNG) tankers worth about 1.8 trillion yen ($17.61 billion) by 2020 as they gear up to transport rising volumes of the super chilled fuel from North America and Australia.

A sign of Japanese shipping company Mitsui O.S.K. Lines is seen at the company's head office in Tokyo July 20, 2009. REUTERS/Stringer

The expansion plans reflect rising LNG demand in nuclear-free Japan to generate electricity and also in other Asian countries such as China and South Korea. Global LNG trading volume is expected to grow to 400 million tonnes (1.1023 ton) in 2020 from 250 million tonnes in 2012, according to industry data.

Mitsui O.S.K. Lines Ltd. (9104.T), Japan’s second-largest shipping company, plans to increase the number of its LNG carriers to 110 by 2020 from about 70 now, a spokesman said.

Nippon Yusen KK (9101.T), the No.1 shipper in the country, plans to raise its LNG tanker strength to 100 by 2020 from about 70 now while third-biggest shipper Kawasaki Kisen Kaisha Ltd (9107.T) aims to order about 20 new LNG tankers before the end of the decade.

A Kawasaki Kisen spokesman said the company owns some of its existing tankers jointly with its customers or other shippers and the new ships may be also bought jointly with others to keep its balance sheet healthy.

The order plan may change, depending on how many nuclear reactors will restart in Japan, said an official at the LNG carrier division of Mitsui O.S.K.

“We will place an order only after we sign a long-term contract with our LNG customers who could be producers or buyers,” he said.

Japan, the world’s biggest importer of LNG, has been increasing imports of the fuel to generate electricity and make up for the shortfall from the shutdown of nuclear reactors after a massive earthquake and tsunami triggered reactor meltdowns at the Fukushima facility in 2011.

In September this year Japan went nuclear-power free for just the third time in more than four decades, with no firm date for re-starting the energy source that has provided about 30 percent of electricity to the world’s third-largest economy.

One LNG tanker usually costs about 20 billion yen, according to industry sources.

A Singapore-based shipbroker expected the deal to be financed by Japanese banks rather than an international syndicate and Japanese shipyards such as Japan Marine United to be favored for the orders.

Editing by Muralikumar Anantharaman

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