Japan: MHI, Imabari Shipbuilding Establish JV Company

Effective April 1 Mitsubishi Heavy Industries, Ltd. (MHI) and Imabari Shipbuilding Co., Ltd. of Imabari, Ehime Prefecture, will jointly establish MI LNG Company, Limited, a company to handle the design and marketing of LNG (liquefied natural gas) carriers.

Through establishment of the JV, the two companies aim to proactively prepare a structure capable of responding to large-scale LNG carrier construction projects, which are expected to increase in tandem with expanding global demand for LNG. By combining MHI’s technology development capabilities and Imabari Shipbuilding’s cost competitiveness, supported further by the effective management of their respective shipyards, the two companies look to win a solid place in the growing international LNG carrier market.

The JV, which will have its head office in Minato-ku, Tokyo, will be capitalized at 50 million yen. MHI will own 51% of equity and Imabari Shipbuilding will hold the remaining 49%. Upon receiving an order for an LNG carrier, the JV will prepare the specifications, etc., and then order ship construction either to MHI’s Nagasaki Shipyard & Machinery Works or to Imabari Shipbuilding.

With shipyards of two companies at its disposal, the JV will be able to secure collective shipbuilding capacity of more than eight LNG carriers per year. This will enable the JV to take orders for multiple LNG carriers, putting it in a position to vie against Korean and other large shipbuilders. Regarding LNG carrier types, besides the conventional Moss type with spherical LNG tanks and the membrane type, the JV can also offer the “Sayaendo,” a new-generation LNG carrier* developed by MHI as a high value-added vessel evolved from Moss-type carriers but achieving enhancements in energy savings and operability.

MHI is a pioneer in Japan’s LNG carrier industry, having engaged in their development and construction since the 1970’s. To date the company has delivered 42 ships. Imabari Shipbuilding, Japan’s largest shipbuilder in terms of both tonnage and sales revenue, is one of major shipbuilding dedicated companies in Japan that include LNG carriers in its portfolio.

Last year, in May MHI agreed with Imabari Shipbuilding to collaborate in container carrier technology, and in July to license manufacture and marketing rights of deck machinery. In October, the two companies jointly received an order for two highly energy-efficient, next-generation pure car and truck carriers from Nippon Yusen Kabushiki Kaisha (NYK Line). This increasingly close relationship between MHI and Imabari Shipbuilding resulted in the latest collaboration agreement.

Owing to the suspended operation of nuclear power plants in Japan in the wake of the Great East Japan Earthquake, demand for LNG as a fuel for power generation has been expanding not only in Japan but globally. In addition, as a direct outgrowth of the “shale gas revolution” in the U.S., the share of North American LNG in the global market is expected to increase, resulting in a trend toward longer transport distances. With volume growing and transport distances lengthening, the number of LNG carriers required is expected to increase. As a result, in order for industry players to attract orders, their shipyards must be structurally prepared to accommodate construction of multiple carriers within in a short period.

Going forward MHI and Imabari Shipbuilding will explore demand for LNG carriers widely as they look to gain an edge in this increasingly competitive market.

Profile of the New Company

Company name: MI LNG Company, Limited

Business scope: Businesses related to design and marketing of LNG carriers

Head office: 4-5-1, Shimbashi, Minato-ku, Tokyo

President: Haruhiko Omi

Capital: 50 million yen

Operation launch: April 8, 2013

MHI, March 25, 2013

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