Regional LNG: Australia?s NWS Venture to purchase LNG ships

Australia's North West Shelf Venture and its Chinese joint-venture partners are aiming to finalize the purchase of two or three liquefied natural gas ships soon, Dow Jones newswires reported Monday.

However, higher steel costs could increase the price of any ships purchased this year.

North West Shelf Venture is an equal-share joint-venture between BHP Billiton Petroleum, BP Developments Australia, ChevronTexaco Australia, Japan Australia LNG, Shell Development Australia and Woodside Energy.

NWSV, which has a fleet of eight LNG ships, needs at least two more ships to cater to its Guangdong LNG supply contract, a company official said last week.

The new ships will be co-owned by NWSV, China National Offshore Oil Corp. and other Chinese interests.

"Initially, we'll need two 145,000 cubic meter capacity LNG ships for our Guangdong contract, but we may need a third vessel if the sales volume is higher," he said.

North West Shelf Australia LNG Pty. Ltd., the LNG marketing arm of NSWV, now sells about 7.5 million tons a year of LNG to South Korea and Japan, and soon will be supplying China.

In 2003, NWSA LNG won a supply contract in southern China and is expected to supply at least 3.3 million metric tons of LNG to Guangdong province from 2006. About 60% of the import volume is for power generation.

The supply to China will come mostly from NWSV's new No. 4 LNG production train.

NWSV's new 4.2-million ton/year capacity LNG production train is on schedule for mid-2004 completion, with the first LNG cargo expected in the later part of this year.

The new LNG ships will be built at Hudong shipyard in Shanghai, eastern China, he said.

Industry sources said NWSV will have to pay higher prices now for the LNG ships than last year because of the sharp price increase of steel and other raw materials.

A Hyundai shipyard official said the cost of LNG ships has risen significantly from last year's price tag of about US$150 million for a 145,000 cubic meter capacity LNG ship.

The shipyard official declined to estimate the current LNG ship price.

The NWSV official said the ship order will be finalized upon confirmation of the final Chinese supply volume.

The new LNG ships will be managed by a ship management group made up of China Ocean Shipping (Group) Company, China Merchant Group and BP Shipping.

"We're not in a hurry to close the deal for the new ships because the plan is to use the current fleet to help deliver supply to China," in 2006 until the new ships are ready, he said.

Construction of an LNG ship would take about 30 months to complete, the Hyundai shipyard official said. (*)