LNG cargo tanks the size of two soccer fields: S. Korea's secret weapon against China

As China's presence in the global shipbuilding market continues to grow, LNG carriers have emerged as South Korea's secret weapon — the segment where Korean yards consistently out-order their Chinese rivals on the strength of superior technology. HD Hyundai Heavy Industries and other domestic shipbuilders have been pouring resources into securing more LNG carrier orders.

That ambition was on full display Thursday at HD Hyundai Heavy Industries' shipyard in Ulsan, where a 174,000-cubic-meter LNG carrier bound for a European shipping company sat in dock. Stepping inside the vessel, visitors were met with a roughly 3-meter-high space packed on all sides with construction scaffolding. The outer walls were covered in silver-toned steel panels, and workers were in the middle of insulation work on the LNG cargo tanks that will store the fuel.

Once the insulation work is complete and the scaffolding removed, each LNG cargo tank will become a storage vessel the size of two soccer fields by area — 46 meters wide and 35 meters tall. The combined length of all cargo tanks on a single LNG carrier stretches well beyond 300 meters, roughly the height of the Eiffel Tower in Paris.

Safely storing LNG at minus 163 degrees Celsius requires two major construction steps. The first barrier involves stacking more than 13,000 membrane sheets, each 1.2 millimeters thick, against the outer walls of the cargo tank. A second barrier is then built by adding three layers of insulation material on top of the first. Both barriers prevent LNG from leaking into or out of the vessel. The total welding length required to complete the first barrier alone reaches 60 kilometers.

"Both Korea and China build cargo tanks based on licenses received from France's GTT," an HD Hyundai Heavy Industries official said. "The technology is the same, but quality differs depending on welding capability." The official added that Korea holds a technological edge because China's history of building LNG carriers is still relatively short.

China has been closing in fast on Korea in the global LNG carrier market. From January through October this year, Chinese yards secured orders for 32 LNG carriers, capturing a 42.1 percent market share. The gap with Korea — which booked 44 vessels for a 57.9 percent share — has narrowed to just 15.8 percentage points. In October alone, China outpaced Korea, winning orders for five LNG carriers against Korea's two.

The industry nonetheless expects Korea to hold its top position. HD Korea Shipbuilding & Offshore Engineering, HD Hyundai's intermediate shipbuilding holding company, said at last month's earnings conference call that a close analysis of Chinese yards' orders this year shows most are tied to projects linked to Chinese cargo owners. "Most shipowners want to work with Korean shipyards, which can build LNG carriers that are versatile and deployable anywhere," the company said.

HD Korea Shipbuilding & Offshore Engineering plans to keep its LNG order streak going by leveraging its relationships with shipowners and its technological capabilities. "If US and Qatar LNG projects move into full swing, demand for vessels capable of transporting LNG will naturally rise — and that will create opportunities for Korean shipbuilders," an industry official said.