News & Media

06 April, 2021

LNG Market News - Japan

(Source: Japan Maritime Daily 02/Apr/2021)

THE FUTURE OF MAJOR SHIPBUILDERS – There have been twists and turns in the structural reform of Mitsui E&S Shipbuilding’s shipbuilding business

In the shipbuilding business of Mitsui E&S Holdings (HD), it seems that the future direction has been set, but there have been twists and turns so far.

On February 26, this year, Mitsui E&S Shipbuilding, a subsidiary of Mitsui E&SHD, delivered a news release together with Kawasaki Heavy Industries. The content is to end the joint venture at MES-KHI Yura Dock (Yura Town, Wakayama Prefecture), which handles ship repairs. Previously, the company was MES Yura, wholly owned by Mitsui Engineering & Shipbuilding (currently Mitsui E&SHD), but in April 2015, it transferred a 40% stake to Kawasaki Heavy Industries and started a new operation. It is possible that the two parent companies had the speculation that this would lead to a stronger relationship.
 

In an interview with this newspaper in June 2018, Tetsuro Koga, president of Mitsui E&S Shipbuilding (at that time) said, “Since then (when MES-KHI Yura Dock was launched), the mindset to collaborate with other companies has increased.“
 

In April 2018, Mitsui E&SHD shifted to a holding company system and spun off three businesses, including shipbuilding. In the spin-off, M & A (merger / acquisition) with other companies was also considered. The mindset to partner with other companies increased further around this time, and Kawasaki Heavy Industries should have been a strong candidate.
 

On the other hand, since then, there has been no noticeable movement with Kawasaki Heavy Industries, and a joint venture shipyard in China has been set up that goes against the strengthening of the alliance. This is because Kawasaki Heavy Industries already operates two joint venture shipyards in China.
 

The “MES-KHI Yura Dock“ which could have been a catalyst for strengthening relationships with Kawasaki Heavy Industries, has now quietly finished its role. From the 1st of this month, the company will change its name to “MES Yura Dockyard“, a wholly owned subsidiary of Mitsui E&S Shipbuilding, and will continue its business.
 

■ Both sides have bases in China
 

There is a similar situation with Tsuneishi Shipbuilding. In May 2018, one month after Mitsui E&S Shipbuilding was spun off, it formed a business alliance with Tsuneishi Shipbuilding in the commercial ship business field. Five months later, it announced plans to launch a joint venture in China, but Tsuneishi Shipbuilding has a sole-owned shipyard in China. The industry could not grasp the intention of Mitsui E&S Shipbuilding, which has its own joint venture shipyard in China, while partnering with a company that has a factory in China.
 

In an interview with this newspaper in October 2018, Yasunori Iwamatsu, Executive Vice President and Executive Officer of Mitsui E&S Shipbuilding (at that time) said, “Tsuneishi’s China plant is increasing the gantt chart (the amount of orderbook). There are restrictions on orders for delivery due soon. The joint venture will be capitalized by the Company and will increase the degree of freedom. In addition to expanding the options for overseas construction bases, it is significant that capital is invested in those construction bases. “
 

The work to transfer a part of Mitsui E&S Shipbuilding to Tsuneishi Shipbuilding has reached the final stage. However, this theme is likely to continue as an issue for consideration as the alliance is further strengthened, such as the division of roles between the two Chinese factories.
 

On March 30, the Mitsubishi Heavy Industries Group announced that it had signed a contract to transfer the new shipbuilding area of the Nagasaki Shipyard & Machinery Works Koyagi Plant (Nagasaki City) to Oshima Shipbuilding. In recent years, the factory has been continuously building LNG (liquefied natural gas) carriers in the large ship construction yard, but has been struggling due to intensifying international competition with South Korea and other countries.
 

In the future, the Mitsubishi Heavy Industries Group’s commercial ship business (Mitsubishi Shipbuilding) will focus on the Shimonoseki Shipyard & Machinery Works (Shimonoseki City, Yamaguchi Prefecture) and specialize in ship types with high loading density such as RORO ships and ferries. Construction of a system to generate profits will be promoted with two pillars including engineering business including design support / provision to other companies and construction consignment.
 

In the engineering business field, the manufacturing of FGSS (Fuel Gas Supply System) and other products for domestic and ocean-going LNG-fueled vessels, for which demand is increasing, and engineering services for gas handling-related peripheral equipment associated with the shift to LNG fueling are being strengthened. Similar to Mitsui E&S Shipbuilding, in addition to providing drawings, the company will explore commercial opportunities in areas where it can make the most of its strengths, such as the development of liquefied CO2 (carbon dioxide) carriers using gas-related technologies cultivated through the construction of LNG carriers from an environmental perspective, as well as businesses related to the electrification and autonomous operation of ships as digitalization progresses. Work as a system integrator that stands out in Europe is also in sight.

Disclaimer: The English translations provided through this service are the result of translations made by The Japan Maritime Daily or automatically and mechanically translated by The Japan Maritime Daily using an automated translation system provided by a third party after certain processing of the Japanese content licensed by the third party. In terms of the English translation, The Japan Maritime Daily and MarineNet Co., Ltd. make no warranty or burden of any kind, express or implied, including its accuracy, reliability, validity or fitness for a particular purpose. MarineNet Users should fully understand that this service uses an automated translation system that automatically and mechanically recognizes and analyzes information and produces results. The users should understand the above conditions before using this service.


(Source: Japan Maritime Daily 31/Mar/2021)

Oshima Shipbuilding has decided to acquire a new shipbuilding area of Mitsubishi Heavy Industries, Nagasaki Shipyard & Machinery Works Koyagi Plant

Oshima Shipbuilding has decided to acquire a new shipbuilding area of Mitsubishi Heavy Industries, Nagasaki Shipyard & Machinery Works Koyagi Plant (Nagasaki City), which has one of the largest docks in Japan. The two companies signed a transfer agreement for the area on March 30, and announced on the same day. Oshima Shipbuilding has not disclosed the reason for the acquisition, but it is highly likely that it will utilize the Koyagi Plant for the construction of next-generation vessels such as LNG (liquefied natural gas) fueled vessels and wind power propulsion vessels. By building a ship with a longer dressing period due to the application of new technology, it seems that the aim is to maintain the high-speed construction of bulkers, which is the greatest feature of its own Oshima Plant (Saikai City, Nagasaki Prefecture).

The transfer will start in stages from 2021 and will be completed in 2022. The Koyagi Plant has a repair dock in addition to the new shipbuilding dock acquired by Oshima Shipbuilding. The repair dock will continue to be owned by the Mitsubishi Heavy Industries Group.

In December 2019, the Mitsubishi Heavy Industries Group announced that it would start discussions with the company, aiming for an agreement by the end of March 2020 to sell the Koyagi Plant to Oshima Shipbuilding. The talks had been prolonged due to the influence of the coronavirus pandemic, but this time the contract was reached.

As of the end of 2019, the Koyagi Plant had orderbooks for three LPG (liquefied petroleum gas) vessels and one VLCC (Very Large Crude Carrier), with the final VLCC to be delivered by the second quarter of fiscal 2021. For this reason, when Oshima Shipbuilding acquired the Koyagi Plant, it was thought that the time would be after the latter half of 2021 from the beginning.

The Koyagi Plant has one of the world’s leading building docks with a length of 990 meters, and in recent years it has continuously built LNG carriers and other vessels at a pace of five ships per year.

However, the Mitsubishi Heavy Industries Group struggled in the field of large vessels such as LNG carriers due to intensifying competition with Korean shipyards. As a result, “it must be said that it is difficult to build a large cargo ship at our own shipyard“ (Mitsubishi Shipbuilding President Tohru Kitamura), and it decided to transfer the Koyagi Plant to Oshima Shipbuilding.

In the future, the new shipbuilding business will focus on the Shimonoseki Shipyard & Machinery Works (Shimonoseki City, Yamaguchi Prefecture), and will specialize in ship types with high equipment density such as RORO ships and ferries. Construction of a system to generate profits will be promoted with two pillars including engineering business including design support and provision to other companies and construction consignment.

On March 30, Mitsubishi Heavy Industries commented, “We will continue to maintain our comparative advantage and develop our business sustainably by concentrating our management resources on ships and marine engineering where we can add value.”

On the other hand, Oshima Shipbuilding has not disclosed its aim to acquire the Koyagi Plant, which has one of the largest docks for new shipbuilding in Japan, while the Japanese shipbuilding industry continues to struggle due to the slump in the new shipbuilding market.

However, Oshima Shipbuilding seems to have plans to utilize the Koyagi Plant for the construction of new technology-applied vessels such as LNG fuel vessels and wind power propulsion vessels, which will have a longer loading period.

In December 2019, the company announced an order from NYK for the world’s first large LNG fueled coal carrier. In addition, a coal carrier equipped with the hard sail system wind power propulsion device “Wind Challenger“ will be built for MOL. The two vessels are expected to start building in 2022, and it is highly possible that the construction site will be a Koyagi Plant.

In this way, Oshima Shipbuilding has already received orders for multiple vessels to which the new technology is applied, which have a long mounting period. The company is also focusing on the development of next-generation vessels such as battery-powered vessels and self-operated vessels. On the other hand, the company’s greatest strength is the efficiency of building 40-50 bulkers a year at high speed at the Oshima Plant alone.

Oshima Shipbuilding, which specializes in building bulkers in the 30,000-100,000 dwt range under the slogan “Oshima of the Bulks,“ is believed to have acquired the Koyagi Plant to maintain its competitiveness through its unique high-speed construction model and to build next-generation ships in earnest.

 

Disclaimer: The English translations provided through this service are the result of translations made by The Japan Maritime Daily or automatically and mechanically translated by The Japan Maritime Daily using an automated translation system provided by a third party after certain processing of the Japanese content licensed by the third party. In terms of the English translation, The Japan Maritime Daily and MarineNet Co., Ltd. make no warranty or burden of any kind, express or implied, including its accuracy, reliability, validity or fitness for a particular purpose. MarineNet Users should fully understand that this service uses an automated translation system that automatically and mechanically recognizes and analyzes information and produces results. The users should understand the above conditions before using this service.