Korean shipbuilders may sofon face a second competitor in the LNG carrier market they lead. A major Japanese shipbuilder is considering a large new dock capable of building liquefied natural gas (LNG) carriers as Tokyo pushes to revive an industry Japan dominated until the 1990s.

Namura Shipbuilding is considering building the dock near its Imari shipyard in Saga Prefecture by 2035, Japanese media reported. The facility would handle LNG carriers, ammonia carriers and other next-generation energy vessels. The project could cost as much as 100 billion yen ($630 million), including government support.

The dock would be Japan’s first new large shipbuilding dock since 2017, when Imabari Shipbuilding completed one in Marugame, Kagawa Prefecture.

Japan’s ministry of land, infrastructure, transport and tourism brought Namura, Imabari and Kawasaki Heavy Industries together on Friday for talks on establishing a stable domestic supply system for LNG carriers. The ministry said the ultimate aim is for the shipbuilding industry to establish a self-sufficient system for building the vessels in Japan.

Japan led the global shipbuilding industry through the 1990s before Korea took the top spot in the 2000s and China surged ahead the following decade. Through July of this year, China accounted for 75 percent of global new ship orders by compensated gross tonnage, followed by Korea at 17 percent and Japan at 2 percent.

Prime Minister Sanae Takaichi has made a revival of the country’s shipbuilding capacity part of Japan’s economic security agenda.

“Shipbuilding is an extremely important industry that supports not only people’s lives and economic activity but also national security,” Takaichi said in a parliamentary response last year.

Japan named shipbuilding one of 17 strategic sectors in its growth strategy and is seeking about 1 trillion yen in public and private investment by 2035. The government also aims to double annual shipbuilding capacity from about 9 million gross tons to 18 million gross tons. Japanese media have reported that Tokyo is considering subsidies to narrow the price gap with Korean and Chinese yards.

Korean shipbuilders still dominate LNG carrier orders but face growing competition from China. Of the 55 LNG carriers ordered worldwide in the first half of this year, Korean yards won 36, or 65.5 percent, while Chinese yards took 19, or 34.5 percent.

“Japan is highly dependent on LNG and is a major customer in the LNG carrier market,” Yang Jong-seo, a senior researcher at the Export-Import Bank of Korea, said. “If it starts building the ships itself, that would mean losing that much of the market.”

Industry sources do not expect Japan to become a major threat in the short term. Japanese yards have little recent experience building membrane-type LNG carriers, which have become the global standard.

Membrane systems use thin metal barriers inside cargo tanks to prevent leaks. They make more efficient use of hull space and are better suited to larger vessels than the spherical Moss tanks Japanese yards historically favored. Japan has not built a membrane-type LNG carrier since 2018.

Japan also lost skilled shipbuilding workers as the industry contracted after the 1990s, another obstacle to rebuilding capacity quickly. Japanese shipbuilders are considering seeking technical cooperation from Korean companies as they try to restore LNG carrier production.

“Shipbuilding technology is a core national capability, so cooperation with a country that could become a competitor has to be approached carefully,” Yang said.

Japan’s shipbuilding revival could also create opportunities for Korean marine equipment suppliers.

“If Japan resumes building LNG carriers, orders could rise for products such as cryogenic insulation, where Korean firms hold an oligopoly,” Han Seung-han, an analyst at SK Securities, said.

Source: Korea JoongAng Daily