The Office of the United States Trade Representative (USTR) recently issued new regulations requiring that a certain percentage of U.S. liquefied natural gas (LNG) exports must be carried by LNG carriers built in the U.S. This policy gives Hanwha Ocean the opportunity to build the first domestically built LNG carrier in the U.S. in decades.
On April 17, U.S. time, the USTR announced the results of its 301 investigation against China in maritime transportation, logistics and shipbuilding, and proposed the latest restrictive measures. The relevant measures will be implemented in phases, including the imposition of port charges on Chinese shipowners and Chinese-built ships.
In addition, to encourage the U.S. shipbuilding industry, the USTR requires that a certain percentage of U.S. LNG exports after three years be transported by U.S.-built LNG vessels. From 2028 to 2047, the percentage of U.S. LNG exports that need to be carried on U.S. ships gradually increases from 1 percent to 15 percent.
Hanwha Shipping, a U.S. company owned by Hanwha Ocean, said it expects the U.S. will need five to seven U.S.-flagged LNG carriers by 2030, according to the USTR.
Hanwha Ocean acquired the Philly shipyard in the U.S. at a cost of $100 million at the end of last year. After seeing the business opportunities for LNG carriers in the U.S., Hanwha Ocean said it will be ready to build LNG carriers in the U.S., which will be the first LNG carriers to be built in the U.S. locally since the 1970s.
LNG carriers are one of the most difficult and complex types of ships to build. Given that U.S. shipyards currently lack the ability to build LNG carriers, USTR’s policy has been strongly opposed by the U.S. LNG industry.
Data shows that there are about 800 LNG carriers in the world, only three of which are U.S.-built and are more than 50 years old. The U.S. LNG industry believes that USTR’s restrictions will put long-term LNG contracts at risk, increase the costs of buyers in the global market, and has urged that they be lifted.
Charlie Riddle, executive director of the LNG Center, a U.S. LNG industry organization, criticized in a statement: “The shipping restrictions (proposed by the USTR), especially the requirement that U.S. LNG must be transported by U.S.-built, U.S.-flagged ships, are completely unrealistic. The U.S. does not even have a single LNG carrier that meets the requirements, and it takes decades to build such a ship, so it is impossible to comply with this regulation.”