China's shipbuilding industry is stepping into a new development era with the first liquefied natural gas (LNG) shipbuilding contract in the nation signed yesterday in Beijing.

Hudong-Zhonghua Shipbuilding (Group) Co Ltd, a subsidiary of China State Shipbuilding Corp (CSSC), is to build three LNG vessels with a capacity of 147,200 cubic meters for the LNG project in southern Guangdong Province.

The project, which is expected to be put into operation in mid-2006, will import over 3 million tons of LNG from Australia annually to supply the energy-starved region.

"The contract announced that China will start to construct its first LNG ship, filling a blank in the country's shipbuilding history," said Xu Dingming, an official from the National Development and Reform Commission, at the signing ceremony.

It will also upgrade China's shipbuilding technology and bring about the development of shipbuilding-related industries, he said.

The first two LNG vessels, with a total investment of US$400 million, will be delivered in October 2007 and in early 2008 respectively. The third will be delivered later.

The carriers are jointly invested by China Shipping (Group) Co, China Merchants Group Ltd, Upper Horn Investments Ltd of Guangdong Yuedian Group, Shenzhen Marine Company, Australia LNG Pty. Ltd (ALNG), and the Energy Transportation Group.

Each ship will be able to deliver about 1.42 million tons of LNG a year from Withnell Bay in Australia to Dapeng Bay in Guangdong.

Before the first vessel is delivered, ALNG will provide a vessel to meet the requirements of shipping LNG in the initial period.

Building of this first LNG vessel indicates China's shipbuilding industry has entered a higher level, and it will help improve the industry's competitiveness in the world market," said Gu Baolong, chairman of Hudong-Zhonghua.

LNG ships are known as a product with high technology, of high standards and high value. So far, only Japan, South Korea and some European countries have the ability to build LNG vessels.

Shipbuilder Hudong-Zhonghua began its study on LNG ship construction in 1999. To date, 90 percent of the ships' design and 80 percent of the equipment order have been completed.

"Increasing LNG imports to China will offer big opportunities for domestic shipbuilding firms to develop in the sector and thus enter the huge world market," an official from CSSC said.

(China Daily August 12, 2004)