China is one of the largest ship building centres in the world, but with the government’s ambitious plans for offshore development, and its desire to use LNG as an alternative to coal as an energy resource to reduce pollution, we expect a huge rise in demand for ships. By 2017, there will be 17 LNG receiving terminals in China, each requiring between three to five LNG carriers to run at capacity. This could see China’s existing LNG carrier fleet expanding from 10 to 80 vessels by 2020.
To meet this demand, boost economic growth and to secure China’s energy security as it moves to new resources, the Chinese government is focused on building many of these ships domestically. China has the potential to add $40 billion in new shipbuilding projects in the next six years. Plus, if China manages to modernize its capabilities, it could grow its market share for advanced vessels by 5% or more.
China already has many capable shipyards, but much of this effort has been focused on container ships, general cargo and tankers. Korea on the other hand, has a lead in more advanced ship building such as LNG carriers, many of which are now powered and propelled by electricity, enabled by thousands of highly skilled engineers and designers. If China is to gain its desired share in this market, it’s vital that it ups its skills base to meet demand for more advanced vessels.
The Shanghai Maritime University (SMU) in China – together with GE Power Conversion - is trying to help China can make this shift. Progress here requires tremendous technology support and expertise in the marine space. The laboratory at SMU, which is the first of its kind in China, will help transfer GE’s market knowledge and apply advanced technology to the local marine industry. Students will have the opportunity to get hands-on experience in marine operation, inspection and maintenance scenarios. This kind experience is critical as we see a move towards more efficient and reliable vessels, which can meet current and future environmental regulations. Electrification is key to this.
Global marine markets have had volatile moments in the past, but China is well aligned with future investment trends in LNG and offshore development. With strong support from the government, and technical support from industry, it’s in a good position to meet the challenge.