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SembMarine snags S$175m in contracts to build LNG vessel, repair and upgrade cruise ships
SEMBCORP Marine has secured new contracts worth an estimated S$175 million for the design and construction of a liquefied natural gas (LNG) bunker vessel and the repair and modernisation of 13 cruise ships.
The LNG vessel will be built for Indah Singa Maritime, a subsidiary of Mitsui OSK Lines (MOL), at the Sembcorp Marine Tuas Boulevard Yard.
The 112-metre long and 22m wide vessel will have two tanks with a combined 12,000-cubic-metre (cbm) capacity. This makes the vessel the largest of its kind to be built in Singapore in terms of size and LNG tank capacity, said Sembcorp Marine. It is also the company's first LNG bunker vessel construction project.
Sembcorp Marine said it will fabricate the vessel’s unique membrane tanks under a licensing agreement with French LNG containment specialist GTT.
Upon completion in early 2021, the vessel will be chartered to Pavilion Gas, a subsidiary of Pavilion Energy, for deployment in Singapore.
In a separate announcement on Monday, Pavilion Energy, a wholly-owned subsidiary of Temasek Holdings, said it was awarded a S$3 million grant under the Maritime and Port Authority of Singapore’s (MPA) LNG Bunker Vessel Co-Funding Grant. The sum will go towards the construction of the bunker vessel.
Pavilion Energy and Total Marine Fuels Global Solutions, a subsidiary of French multinational integrated oil and gas company Total SA, have also agreed to co-share utilisation of the vessel.
According to Pavilion Energy, industry reports indicate a growing interest among shipowners in opting for LNG as a marine fuel as the global shipping industry looks to adapt to stricter emissions standards. The International Maritime Organization’s new cap for sulphur content in marine fuels of 0.5 per cent from 3.5 per cent comes into force on Jan 1, 2020.
Sembcorp Marine has also partnered with Carnival Cruise Line, Royal Caribbean Cruise Line, Star Cruises, Norwegian Cruise Line and Star Clippers Monaco for 13 new cruise vessel repair and modernisation projects. The projects will be executed at its Admiralty and Tuas Boulevard yards.
Including the latest contracts, the company said it has now refitted and upgraded 115 cruise ships in the past 10 years.
Sembcorp Marine expects a positive contribution to its earnings from the contracts, but they are not expected to have any material impact on the group’s net tangible assets and earnings per share for the year ending Dec 31, 2019.
Sembcorp Marine president and CEO Wong Weng Sun said the LNG bunker vessel project "will be will be a sophisticated newbuilding that not only delivers optimal technical performance, but also helps MOL and Pavilion Energy contribute to the expected standard of LNG bunkering operations in Singapore."
He added that while the company is "expanding into new innovations, products and energy value chain solutions", it is still "proud to retain its traditional excellence in ship repairs and upgrades".
At 3.25pm, Sembcorp Marine shares were down three Singapore cents at S$1.73.