Independent LNG containment systems developed in co-operation with South Korean shipyards pose an increasing threat to market leader GTT, according to a shipbuilding analyst at Hana Financial Group.
Hana Financial Group analyst Moo-hyun Park pointed out that South Korean shipyards have been paying licencing fees to GTT of US$10M for every LNG carrier built for years because the French company owns the core membrane technology for several types of LNG containment systems. With South Korean shipyards dominating the LNG carrier construction market – with 83% of the current orderbook of 101 vessels according to the latest data from Clarksons Research – the royalty arrangement has been very lucrative for GTT.
As a result, said Mr Park, South Korean shipbuilders have been focusing on developing individual LNG cargo containment systems to replace GTT’s technology. There are three types of South Korean independent LNG cargo containment systems: KC-1, developed by KOGAS with South Korean shipyards, Solidus by Daewoo Shipbuilding & Marine Engineering (DSME) and KCS by Samsung Heavy Industries (SHI).
“SHI developed KCS as an independent LNG containment system in 2011. The boil-off-rates of KCS are 7%, and that is similar to the Mark V of GTT,” said Mr Park. “If the thickness of KCS increases, the boil-off-rates will be lower. As KCS technology is highlighted, it would be a good chance to reduce the cost of constructing an LNG carrier and achieve technical independence.” He said shipowner Gaslog, for example, is considering KCS technology for its vessels.
DSME, meanwhile, has received general approval from Lloyd’s Register for its Solidus LNG cargo containment system. Solidus uses two metal barriers that surround an insulation material jointly developed with Germany’s BASF, which reportedly lowers boil-off rates from LNG carriers.
Mr Park said Solidus is the only South Korean independent LNG cargo containment system obtaining general approval from a major classification society such as LR and DNV GL. He said general approval from the major classifications could be effective grounds for European shipowners to adopt new technologies into their vessels.
The emergence of Solidus could pose the largest threat to GTT because royalty fees from DSME account for about half of GTT’s revenue, said Mr Park.