Hanwha Orders a Jones Act LNG Carrier From Hanwha Philly
A Hanwha Group subsidiary has purchased a Jones Act LNG carrier from the conglomerate's American shipyard, the recently-acquired Hanwha Philly, according to Bloomberg. It will be the first such vessel built in the United States in 45 years.
"This project aligns with the U.S. government's strategy to revitalize its shipbuilding and shipping industries while strengthening energy security," Hanwha Ocean told Yonhap.
Ryan Lynch, the CEO of Hanwha Shipping, told Bloomberg that the price would be about $250 million - a favorable price for any American-built vessel with the complexity of an LNG carrier, a vessel class that is notoriously difficult to master. Korea's Big Three shipbuilders - including Hanwha - are world leaders in LNG carrier construction, and Hanwha will provide the technology-transfer arrangements to make it possible to do at Philly.
The news follows last month's rumors that Hanwha is planning to reflag Korean-made LNG carriers into the U.S.-flag fleet, making use of the Alternative Compliance Program (ACP), the Coast Guard's inspection and certification agreement with certain class societies.
Reflagged Korean vessels would not be Jones Act-compatible, as they would not be U.S. built. There is a narrow exemption for LNG carriers trading to Puerto Rico, but very few hulls qualify. According to Business Korea, Hanwha is simultaneously watching the U.S. domestic debate over Jones Act reform, which - if acted upon - could allow broader use of less-expensive Korean hulls in U.S. domestic trade.
Hanwha has been moving fast to expand its position in Jones Act shipbuilding with the acquisition and upgrading of Hanwha Philly. It has hired hundreds of new people and has a training pipeline of 170 apprentices; with "smart yard technology," like advanced welding robots, Hanwha thinks it can increase production to 10 ships a year - up from the current rate of 1.5.
In addition to its commercial shipbuilding ambitions, Hanwha wants to win U.S. Navy contracts, including newbuild auxiliaries. Some of those orders could also go abroad, Hanwha acknowledges.
"U.S. support shipbuilding capability has weakened and fallen behind schedule, so the U.S. is considering placing orders with foreign shipyards if support ships [naval auxiliaries] can be built quickly," Hanwha Philly Shipyard chief Lee Jong-Moo told The Korea Times.
In the 2010s, Hanwha's predecessor company DSME won a bid to sell four oilers to the UK Royal Fleet Auxiliary for a favorable price; the Korean builder partnered with a British yard to complete the fitting-out process to ensure UK domestic content.