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Newbuilding Contracts Continue To Boost Market

An additional domestic VLCC newbuilding project has reached the contractual stage in Japan, extending the number of orders placed this year by Japanese operators to six. lino Kaiun Kaisha's contract with Ishikawajima Harima Heavy Industries (IHI) for a 258,000-dwt VLCC, which is most suited to trade at Japanese terminals, has been implemented on the basis of an understanding with prospective charterer Tokyo Tanker. The double-hulled newbuilding is scheduled for delivery at IHI's Kure yard in mid-1999. Kawasaki Heavy Industries (KHI) has signed a contract with Hong Kong's Golden Ocean Group for three double-hulled VLCCs at YlObn ($78.9 million) each. The prices of VLCCs fell below the Y8bn mark in 1994/95, but recovered to the Y9bn mark in 1997. Sources believe that the contract between KHI and the U.K.

company could indicate another upturn in the VLCC price mark. The three VLCCs will be built at KHI's Sakaide Shipyard in the fall of 1999 and are scheduled to be completed by the spring of 2000. Kawasaki Kisen Kaisha (K Line) has chosen a Japanese yard for the construction of two 100,000-dwt Aframax crude oil tankers. They will be built at Imabari Shipbuilding, with delivery dates scheduled for the summers of 1998 and 1999. Shoei Kisen, the whollyowned shipowner/operator of Imabari Shipbuilding, will become the owner of the two vessels. K Line will operate them under a seven-year time charter contract with Shoei Kisen.

Sumitomo Heavy Industries (SHI) is poised to launch the socalled 'parallel' shipbuilding system at its dock in Oppama Shipyard. In August last year, the Japanese Ministry of Transport lifted the restrictions, which prevented the side by side construction of several vessels at one dock. The ministry acted to allow Japanese shipbuilders to boost their efficiency and productivity to compete with South Korea.

Ugland International Holdings has expanded its vehicle carrier interests with an investment in new tonnage potentially worth $162 million. The contract, placed with Tsuneishi Shipyard, calls for one newbuilding, with a capacity to transport 6,100 cars at a speed of 20.1 knots, plus options for the construction of two similar vessels. Delivery is scheduled for May 1999.

Euro Marine Carriers (EMC) has placed an order with Japan's Shin Kurushima Dockyard for the construction of two autocarriers, each with a capacity of 900 vehicles, with one on option. They will be delivered to the Netherlandsbased, intra-European auto carrier in March, June and September 1999, and will replace the present fleet of vessels.

Japanese shipbuilders attracted contracts for 8.2 million grt of merchant ships to be registered with foreign firms in the financial year ended in March. The figure, which includes tonnage to the account of overseas subsidiaries of Japanese companies, is virtually on par with that recorded in the preceding fiscal period. There has been a reduction in the number of vessels, though, from 265 to 246. Well over half of the new orders are comprised of bulkers, contributing 4.4 million grt, with tankers being the next largest generic group at 2.6 million grt.

Tokyo-based think tank Japan Maritime Research Institute (Jamri) has forecasted that Japan stands to lose more of its world share of newbuildings to China and South Korea. Seji Nagatsuka, chief researcher at Jamri, said that Japan's share of the world's newbuildings slipped below 40 percent for the first time in 1996. He argued that Japan's worldwide market share could soon be down to 30 percent, continuing a trend of losing business to South Korean and Chinese counterparts which started in the early 1990s.

Japan and South Korea have agreed to suspend 15-year bilateral shipbuilding summit talks by making the latest two-day meeting held in Cheju, South Korea, the last. Meanwhile, Japanese shipbuilders are cautiously expanding their capacity on the back of a weak yen, the growing demand for VLCCs and strong orderbooks. A report by the Japan Ship Exporters' Association (JSEA) showed a total of 407 export ships, totaling 14.5 million grt, in national orderbooks as at the end of April.

Japanese shipbuilders are looking to recovery after being challenged by South Korean counterparts since 1993, and have set about increasing their competitive edge with a combination of drastic rationalization and modernization. Many of the major builders have cut building costs substantially, taking advantage of newly developed computer systems.

Iran's long-awaited project for a series of Suezmax crude oil carrier buildings has been awarded to South Korea's Daewoo Heavy Industries (DHI). DHI hopes to fulfil the entire NITC delivery program over a 12-month period fromdelivery of the two VLCCs for Euronav. NITC is planning to follow up its recently implemented Suezmax newbuilding program with a contract for a series of Aframax tankers.

Malaysian Intl. Shipping Corp. (MISC) has strengthened its contractual ties with South Korea's Hyundai Heavy Industries (HHI) by awarding the yard a multiple chemtanker deal. The project calls for five 30,000-dwt newbuildings, worth an estimated $225 million, in a deal partially financed through a $150 million, five-year loan from a consortium of foreign banks.

U.S.-based drilling contractor Reading & Bates and Conoco are forming a new joint venture to fund construction of a $200 million advanced deepwater drillship, the second of its class. South Korea's Samsung Heavy Industries (SHI) has been selected to build the vessel. Launch date is set for the first quarter of 1999. The vessel will be designed to drill in water depths of up to 10,000 ft., and will be capable of carrying out extensive well tests. The two recent containership additions to the orderbook at Halla Engineering & Heavy Industries (HEHI), thought to be linked with German principals, are for a company known as Petropolars.

Deliveries are somewhat earlier than had originally been rumored, with the ships actually having been contracted for completion in September and October 1998, respectively. Rated at 3,400 TEU capacity on 45,000 dwt, each vessel has commanded around $44 million, about $3 million higher than the unit price for the 2,500-TEU containership pair in hand for German owner Friedrich Detjen. Halla also recently announced that it has signed contracts with Singapore's Tai Chong Cheang Group (TCC) to build two 170,000- dwt bulkers worth $87 million. The company and the Singapore government's Trade Development Board said that an agreement was signed by the honorary chairman of the Halla Group, IY Chung, and the chairman of TCC, KH Koo.

The bulkers will be delivered to Concord Navigation Ltd., a subsidiary of the TCC group. The first vessel is scheduled for delivery in April 1999.

Tai Chong Cheang Steamship, meanwhile, is set to put fresh momentum behind the investment flow for Aframax tanker tonnage. The Singapore-based company, previously domiciled in Hong Kong, has signed a letter of intent with Halla for the construction of two 105,000-dwt crude oil carriers. The tentative commitment to the tanker projects coincides with its $87 million contract at Halla for two 168,000-dwt bulk carriers. Tonnage replacement and renewal of Cosco's fleet is the primary target of Kawasaki Heavy Industries' (KHI) joint venture yard on the lower Yangtza.

Located at Nantong, in the northern province of Jiangsu, the joint undertaking between the Japanese group and Cosco will have the capability to construct vessels up to 160,000 dwt, by way of a new shipbuilding dock. The total area of the redeveloped shipyard, at a site where operations have previously been based on floating docks for ship repair, is about 500,000 sq. m. The enterprise is expected to be ready to start newbuilding production in early 2000, with technology transfer from Japan.

The largest repair/refit contract currently underway at Sembawang Shipyard is the three to four-month refit of Vietnamese FPSO Chi Link, which arrived in the yard two months ago. The vessel was converted to a FPSO 10 years ago and will undergo a major refurbishment before returning to its station off the Vietnamese coast. Sembawang is also building the necessary process module for the Statoil FPSO currently under construction at South Korea's Samsung Heavy Industries (SHI). The modules will be installed by Jurong ShipyardKeppel Shipyard is completing the conversion of 59,642-dwt, St.

Vincent-registered tanker Red Teal to a FPSO. The vessel will be renamed Armada Pekasa for its new role off the Malaysian Coast for Petronas. The $12 million contract began three months ago and the ship was due to leave the yard in June. Keppel recently completed the Nortrans conversion of Endeavour for use as a FPSO off the Indian coast, and the yard is currently carrying out an 11- month refit operation onboard FPSO Erawan for Unical (Thailand). Keppel Fels has two newbuilding projects currently underway: the Galaxy 2 semi-submersible rig for Sante Fe, which is due for delivery in August 1998; and 110,000-dwt FPSO Varg, due for delivery to Norway's Saga Petroleum by the end of 1997. The FPSO was recently floated out of Keppel Fels' large building dock. Malaysia Shipyard & Engineering (MSE) — which recently inaugurated a syncrolift system purchased from Todd Shipyards, San Pedro — is currently building a series of small tankers for local owners Ltd (JSL).

Mid-1999 onward, following the

 
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