Korea dominates global orders for VLACs

2023.11.28 16:47:02 | 2023.11.28 17:51:13

A bird’s-eye view of ammonia carrier [Courtesy of Hanwha Ocean]이미지 확대

A bird’s-eye view of ammonia carrier [Courtesy of Hanwha Ocean]

South Korea’s shipbuilding industry secured 76 percent of the orders for very large ammonia carriers (VLACs) commissioned globally in 2023. Ammonia, recognized as a carbon-neutral fuel and a core substance in the future hydrogen economy, is raising expectations that VLACs could become a new growth driver for Korean shipyards.

On Monday, Hanwha Ocean announced its order for one VLAC from an undisclosed shipping company in Oceania, set to be delivered in the second half of 2026, with a contract value of 163 billion won ($125.4 million). Earlier on November 14, Hanwha Ocean disclosed the acquisition of four VLACs from Greek shipping company Natomas, upping Hanwha Ocean’s VLAC orders for the year to five vessels.

“The five VLACs Hanwha Ocean has secured are the world’s largest in terms of order placing,” a spokesperson for the company said, highlighting a rapid increase of $900,000 per vessel within two weeks, signaling strong demand.

HD Korea Shipbuilding & Offshore Engineering also exhibited strong performance this year, securing orders for 14 VLACs. In September, the shipbuilder signed contracts for four VLACs with shipping companies in Singapore and Greece, and recently signed a Letter of Intent (LOI) with Denmark’s A.P. Moller-Maersk for the construction of ten VLACs. Four vessels are scheduled for delivery from the first quarter of 2027, while the remaining six are part of an optional contract for additional shipbuilding.

Samsung Heavy Industries concluded its last order for two VLACs from a shipping company in Africa in October 2022. While there have been no additional orders since then, the company is focused on technological advancements, including establishing ammonia demonstration facilities.

According to industry sources, the global orderbook for VLACs in 2023 stands at 25 vessels. HD Korea Shipbuilding & Offshore Engineering and Hanwha Ocean secured a substantial 76 percent, or 19 vessels. The remaining six orders were reportedly won by China’s Jiangnan Shipbuilding.

VLACs are gaining traction as they facilitate the transportation of ammonia, recognized as an eco-friendly fuel due to their emission-free combustion. With the International Maritime Organization (IMO) declaring international shipping carbon neutral in 2050, ammonia-powered ships are expected to appear from 2025.

The transition to a hydrogen economy also bodes well for the future of VLACs, with ammonia emerging as a likely carrier for hydrogen. Gases like hydrogen and ammonia, when liquefied, are easily transportable due to their reduced volume. Turning a gas into a liquid requires a cooling process, and ammonia turns into a liquid at a higher temperature than hydrogen. The liquefaction point of hydrogen is minus 253 degrees Celsius, while that for ammonia is only minus 33 degrees Celsius, another reason why hydrogen is expected to be converted to ammonia for transportation in the future.

By Kim Hee-su and Minu Kim

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