Knock Nevis – The World’s Largest Supertanker
In the annals of maritime history, few names evoke as much awe and fascination as the Knock Nevis. Known by many names throughout her storied life—Seawise Giant, Happy Giant, Jahre...
Can Ore Ships Be Converted To LNG Carriers?
TMT Co., the Taiwanese ship operator run by Nobu Su, said it may convert four very large ore carriers into liquefied natural gas tankers as it struggles to reach an agreement with miner BHP Billiton Ltd. (BHP) on charter rates.
The shipping company has asked for a minimum guaranteed payment, while BHP wants to tie fees to an index tracking rates between West Australia and China, Su said in an interview in his Taipei office Oct. 16. BHP spokeswoman Eleanor Nichols declined to comment when contacted by phone.
“We want a minimum rate, so we can talk with banks about financing,” Su said. Banks can’t predict cash flows when rates are based on a floating index, he said. The four VLOCs are due to be delivered by shipbuilder Hyundai Heavy Industries Co.
TMT, which has a fleet totaling 6 million deadweight tons, intends to expand in LNG shipping after commodity-carrying rates plunged about 90 percent over five years because of overcapacity and slower demand in China. The company will save money for the LNG push by not accepting some of seven panamax-size dry-bulk ships it has on order at Hyundai Heavy Group.
“We’re not going to take all of them,” Su said. The ships were among $2.5 billion of deals that TMT placed with Hyundai Heavy through about 2009, he said. Su denied a Reuters report that the company has defaulted on payments to the shipbuilder.
TMT has received two panamax ships from Hyundai Heavy, and another one was sold by the shipbuilder, Su said. A panamax is the biggest ship able to pass through the locks of Panama Canal. VLOCs are larger vessels with a capacity of about 240,000 DWTs.
TMT paid $1 billion in cash as down payments to Hyundai Heavy (009540) without a refund guarantee, Su said. The company doesn’t have any other bulk ships on order, he said.
Hyundai Heavy, based in Ulsan, South Korea, said by e-mail that it had sold one of the TMT panamax ships and that seven more were up for sale. It expects to deliver the VLOCs to TMT, it said.
TMT has separately signed an initial agreement with Japanese shipbuilder IHI Corp. (7013) on the construction of LNG vessels, Su said, without elaboration.
The company has also reached agreement with the government of Sao Tome & Principe regarding the development of floating LNG facilities, he said. The west African country is among 23 nations worldwide that maintain formal ties with Taiwan. Most other countries have diplomatic relations with China, which claims Taiwan as part of its territory.
Annual demand for LNG will more than double to about 460 million tons by 2025, according to Deutsche Bank AG forecast in August. LNG consumption is rising after Japan’s nuclear disaster last year, and as global warming prompts a shift to the cleaner fuel from coal.
By Yu-huay Sun, ©2012 BLOOMBERG
Join the gCaptain Club for curated content, insider opinions, and vibrant community discussions.
Join the 110,620 members that receive our newsletter.
Have a news tip? Let us know.
Access exclusive insights, engage in vibrant discussions, and gain perspectives from our CEO.
Sign UpMaritime and offshore news trusted by our 110,620 members delivered daily straight to your inbox.
Essential news coupled with the finest maritime content sourced from across the globe.
Sign Up