- HD Hyundai signs a $470 million contract to build four Very Large Gas Carriers (VLGCs) for a Middle Eastern shipping company.
- The shipyard has secured 76 orders in 2024, reaching 35.2% of its annual target of $23.31 billion in just four months.
- Global LPG transport demand is growing at 3% annually, increasing the need for certified gas operations officers.
In a significant development for the maritime sector, HD Korea Shipbuilding & Offshore Engineering (HD KSOE), part of the HD Hyundai conglomerate, has clinched a deal worth $470 million to construct four Very Large Gas Carriers (VLGCs). This order, placed by a Middle East-based operator in 2024, signals robust demand in the gas shipping niche and underscores HD Hyundai’s strong start to the year, having already surpassed a third of its annual order goal.
CONTEXT AND BACKGROUND
This contract is not an isolated event. It aligns with a broader investment wave in liquefied petroleum gas (LPG) and ammonia transport capacity, driven by market and geopolitical factors. The International Energy Agency (IEA) projects global LPG consumption to rise by about 3% each year. Asian demand, particularly from China and India, is a key driver, requiring millions of additional tonnes of imports in coming years.
US shale gas exports are a primary catalyst. US export capacity, mainly from the Gulf of Mexico, is expected to expand by 45% to 66% by 2028. This surge necessitates a modern, efficient fleet to serve Asia-Pacific markets, explaining the renewed interest in VLGCs, the largest vessels dedicated to this trade.
IN-DEPTH TECHNICAL ANALYSIS
Behind the $470 million figure lie critical technical decisions. Modern VLGCs are highly specialised ships. These new units likely feature dual-fuel propulsion systems, capable of burning both fuel oil and cargo gas (LPG or LNG), significantly cutting sulphur and CO2 emissions.
To store cargo at -50°C, these vessels use cryogenic tanks. The dominant technology for VLGC tanks is the membrane system, such as GTT’s Mark III, which maximises cargo volume within the hull. Building these systems demands extreme precision and highly skilled labour in shipyards.
Operationally, these ships must comply with the IGF Code (International Code of Safety for Ships using Gases or other Low-flashpoint Fuels), mandatory since 2017. This code sets strict design, construction, and operational requirements for crew and vessel safety.
CONCRETE OPERATIONAL IMPLICATIONS
For shipping companies, adding these new VLGCs offers a competitive cost edge. Next-generation vessels are more fuel-efficient and have a lower carbon footprint, crucial for charterers and compliance with regulations like the EU’s Emissions Trading System (ETS).
For shipyards like HD Hyundai Heavy Industries, this order reinforces leadership in a high-value segment. Constructing a VLGC is more complex and profitable than building a standard tanker of similar size. HD KSOE’s current portfolio, with 76 orders including 12 LNG carriers, 20 container ships, and 15 LPG/ammonia transports, shows a clear focus on premium markets.
IMPACT ON THE LABOUR MARKET
The global gas fleet expansion directly boosts job opportunities for maritime professionals. Each new VLGC requires a crew of 20 to 25 seafarers. The most pressing need is for officers certified in gas operations.
The IGF Code mandates that deck and engine officers holding navigational or machinery watches possess advanced training certificates in gas operations. This creates specific demand for captains, deck officers, and chief engineers who have completed specialised courses, as defined in the IGF Code and STCW Convention amendments. For mariners seeking career advancement, this specialisation enhances employability and salary prospects.
MACRO CONTEXT
The rise in gas carrier orders is tied to energy transition and geopolitics. LPG and, especially, ammonia—which can be transported in adapted VLGCs—are emerging as bridge fuels and vectors for green hydrogen. Investing in this fleet is a mid-term bet on gas’s role in the global energy mix.
Moreover, the export route from the US to Asia highlights the strategic importance of maritime corridors like the Panama Canal, whose draught restrictions influence VLGC design (known as Neopanamax), and the Cape of Good Hope.
OUTLOOK
The key question is whether this order surge is sustainable. HD KSOE has an ambitious annual target of $23.31 billion. Achieving 35% in the first four months is a strong start, but it depends on maintaining firm freight demand for gas carriers and avoiding skyrocketing newbuilding prices due to slot shortages at quality shipyards.
Risk lies in potential overcapacity by the end of the decade, when these new units, with deliveries scheduled for 2029, enter service simultaneously. However, structural trends like replacing heavier fossil fuels and sustained Asian demand support a longer positive cycle than in past instances.
FAQ
What is a VLGC and what cargo does it carry? A VLGC (Very Large Gas Carrier) is a gas tanker designed to transport pressurised liquefied gases, primarily LPG (liquefied petroleum gas, a mix of propane and butane) and ammonia. Its typical capacity is around 80,000-85,000 cubic metres.
Why is the IGF Code important for crew members? The IGF Code sets mandatory training requirements for personnel operating ships with low-flashpoint gases as fuel or cargo. Without proper certification, an officer cannot serve on these vessels.
What are the advantages of a dual-fuel VLGC? A dual-fuel ship using cargo gas (boil-off gas) as fuel drastically reduces sulphur oxide (SOx) and particulate emissions, with significant cuts in nitrogen oxides (NOx) and carbon dioxide (CO2) compared to traditional heavy fuel oil.
How does this order impact spot freight rates? In the short term, there is no impact, as the ships will be delivered in 2029. In the medium to long term, a significant increase in transport capacity could pressure freight rates downward if transport demand does not grow at the same pace.
Editorial Note: This article has been professionally adapted from Spanish to British English
for the WishToSail.com international maritime audience. Original article published at
QuieroNavegar.app.
