Mitsui O.S.K. Lines Announces $5 Billion Fleet Expansion Plan

FSRUs and FPSOs are also a signifcant part of MOL’s strategy with plans to increase their fleet size by 14 by 2020. Image: GDF Suez

TOKYO, March 31 (Reuters) – Japan’s second-largest shipping company, Mitsui O.S.K. Lines Ltd (MOL), plans to invest 520 billion yen ($5.05 billion) in the liquefied natural gas (LNG) tanker business over the next six years in a bid to expand growth.

In a new mid-term business plan unveiled on Monday, the Tokyo-based company said it aimed to increase the number of its LNG carriers to 120 by March 2020 from 66 now.

“With the revolution of shale gas and oil, demand for long-distance LNG transport is on the rise, which gives us a great growth opportunity,” MOL President Koichi Muto told a news conference.

Global LNG trading volume is expected to grow to 400 million tonnes in 2020 from 250 million tonnes in 2012, industry data shows.

The new fleet figure, which exceeds MOL’s previous target of 110, reflects rising demand for LNG to generate electricity in nuclear-free Japan, and also in other Asian countries, such as China and South Korea.

Nippon Yusen KK, Japan’s No.1 shipper, also said last week it planned to raise its LNG tanker strength to 100 by March 2019 from about 70 now.

Third-ranked shipper Kawasaki Kisen Kaisha Ltd has said it aims to order about 20 new LNG tankers before the end of the decade.

MOL’s new spending on LNG tankers accounts for about half of its total capital expenditure plan, worth 1 trillion yen, for the next 6 years.

The company also plans to invest 180 billion yen in offshore business as another area to propel its group net profit to 110 billion yen in the 2019 business year, which runs until March 2020, a near doubling of the 57 billion expected for the 2013 business year, which ends on March 31.

As a result of the spending MOL expects LNG tanker and offshore assets to make up about 26 percent of its portfolio in 2020, up from 9 percent now, it said.

Its current fleet mainstay of dry bulkers and container ships will be slimmed to 49 percent from 60 percent.

“Considering ongoing shipyard overcapacity, we need to realise that a structural upturn in the market environment is years away,” Muto said.

“We want to lower our business exposure to market volatility. We’ll steer toward new opportunities to secure stable and long-term profits.” ($1=102.9250 Japanese yen) (Reporting by Yuka Obayashi; Editing by Clarence Fernandez)