Chalk up another way that China is benefitting from Western sanctions against Russia.
First, we saw China seize the opportunity to buy Russian oil at a steep discount. Now, China’s shipyards are racking up record orders for liquefied natural gas (LNG) tankers as world markets adjust to supply disruptions caused by the sanctions regime.
In 2022, China scored 45 LNG tanker orders — quintupling the country’s tally from last year. Having assembled only 9% of the world’s existing LNG tankers, China captured 30% of this year’s orders and now accounts for 21% of global orders on the books, Reuters reports. That’s about $60 billion in business.
China’s growing presence in this specialty shipbuilding market represents demand spilling over from South Korea, which has long dominated the LNG tanker category. Hudong-Zhonghua Shipbuilding accounts for 75% of China’s 2022 orders.
South Korean shipbuilders have been deluged with orders for ships that will be used to transport gas from Qatar’s North Field expansion. That will bring huge growth in Qatar’s production capacity — to the extent that QatarEnergy’s CEO in October said his company will, within the next five to ten years, surpass Shell as the world’s largest natural gas trader. In that endeavor, Qatar is itself capitalizing on Europe’s drive to replace Russia’s pipeline gas with shipborne imports.
Building modern, membrane LNG tankers is a highly technical process that requires certification by Gaztransport & Technigaz (GTT), a French company that holds the patents and licenses its designs to shipyards. The need for precision — as hundreds of workers painstakingly laser-weld seams inside 40-meter-tall LNG tanks — translates into build times of up to 30 months.
