HD Hyundai Heavy Industries, Hanwha Ocean and Samsung Heavy Industries are expected to compete for three 100,000 cbm very large ethane carriers (VLECs) worth about US$500 million. The three Asian shipowners are negotiating charter contracts for the three VLECs.
India’s state-owned energy company Oil and Natural Gas Corporation (ONGC) is looking to order three 100,000 cbm VLECs and has asked HD Hyundai Heavy Industries, Hanwha Ocean and Samsung Heavy Industries for quotes, industry sources said.
ONGC is also simultaneously pursuing charter contracts with Nippon Yusen Kabushiki Kaisha (NYK), Mitsui OSK Lines (MOL), and Malaysia’s MISC Berhad (MISC). MOL is considered the most likely to win the charter contract based on a strong package.
The cost of the new vessels has not yet been disclosed, but based on current market prices, the cost of a single vessel is estimated to be between US$157 million and US$168 million, with a total cost for the three vessels of between US$471 million and US$504 million, with delivery scheduled for the first half of 2028.
ONGC requires the new vessels to be equipped with advanced cargo tank technology, the ability to safely transport ethane at low temperatures of around -90°C, and efficient and environmentally friendly engines (e.g., dual-fuel propulsion systems). Funding is expected to come from Indian government support, loans from international financial institutions and shipowner investment.
Indian officials said: “Given government policies and risks, Chinese shipyards are not under ONGC’s consideration.” Japanese shipyards also did not participate in the bidding due to recent order backlogs, labor shortages and relatively high construction costs.
So far this year, there are only two shipbuilders in the world to obtain VLEC orders, respectively, Samsung Heavy Industries at a price of $ 168 million / unit to obtain two VLECs from MOL, HD Hyundai Heavy Industries at a price of $ 157 million / unit to obtain two VLECs from MISC, the capacity of the cargo tanks are 100,000 cbm.
Clarkson data shows that the current global VLEC order book totals 66 units, most of which are undertaken by Chinese shipyards, with Jiangnan Shipyard holding 44 units and Yangzijiang Shipbuilding holding 5 units. The remaining 17 vessels are handled by South Korean shipyards, with HD Hyundai Heavy Industries totaling 12 units, Samsung Heavy Industries totaling 5 units, and Hanwha Ocean yet to build a VLEC.
ONGC is India’s largest oil and gas producer and operates a large petrochemical plant in Dahej, Gujarat through its subsidiary OPaL. ONGC plans to use three newly built VLECs to transport 800,000 tons of ethane imported from North America each year, which will be used to provide raw materials for the petrochemical plant under construction in western India, with an expected commissioning date of May 2028.
In addition to ONGC, Indian state-owned gas company Gail is also increasing its interest in VLECs and is said to have enquired from South Korean shipbuilders. However, Gail is still evaluating its demand for ethane carriers.