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China LNG Shipping: China’s first LNG shipowner

Hong Kong: China LNG Shipping (International) Co (CLSICO) is a Hong Kong-based LNG shipmanagement company whose role is to manage LNG ships importing LNG into China. It was created as part of China’s first LNG import project, importing LNG to a new receiving terminal in Dapeng Bay in Guangdong province. It was established in April 2004 as a collaboration between majority Chinese interests – Cosco and China Merchants – and an experienced LNG ship operator – BP Shipping. As a further collaboration between Chinese and foreign participants, the ships to be managed were all built in Shanghai’s Hudong-Zhonghua shipyard, based upon a design from France’s Chantiers de l’Atlantique and with construction supervision services provided by Shell. From the start, the ships were crewed by a mix of Chinese and Western sea staff, the former seconded from Cosco and China Merchants, the latter from BP Shipping.
From these early beginnings, the CLSICO managed fleet has grown to six, serving the Dapeng LNG terminal (3 ships), the Fujian LNG terminal (2 ships) and the Shanghai LNG terminal (1 ship). The six are sister ships – of 147,000 cu m capacity, with membrane containment systems and steam propulsion.
In July 2013, BP Shipping exercised an option to exit from CLSICO, selling its shares to China National Offshore Oil Corporation (CNOOC).
“Despite BP Shipping’s exit, CLSICO will continue to be resourced by a combination of Chinese and Western staff, in the office and on the ships, CLSICO’s general manager Paul Oliver tells Maritime CEO.
Oliver stresses that CLSICO is only focused on China-linked business and there are no plans to stray from this aim.
“CLSICO’s role is to serve Chinese projects. We were not established and we do not intend to bid for projects that have no China connection,” he says.
Looking at rates for LNG carriers, Oliver says: “With a lot of new capacity being delivered, rates for voyage charters look like being lower this year than they have been for some time, but how long that will last is not clear,” he says.
Most of these new ships will eventually find their way into new projects, Oliver says, explaining that a number of terminal projects are behind schedule which has led to surplus capacity.
In terms of large LNG carrier construction in China, Shanghai’s Hudong-Zhonghua continues to have a monopoly, but Oliver reckons others such as Dalian Shipbuilding Industry Co and Nantong COSCO KHI Ship Engineering (NACKS) are capable of building these expensive ships. The challenge they and others face is that only Hudong-Zhonghua has a track record.
“LNG shipowners tend to be highly risk averse, so this is hard market to break into,” Oliver says, adding: “But there is a lot of business to go around, so I would not be surprised to see a second Chinese yard building LNG ships within the next few years.” [27/02/14]

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