Pan Ocean Enters LNG Shipping Market in Full Scale... Signs 7-Year Long-Term Contract with Shell

Diversification of Business Portfolio to Reduce Concentration in Dry Bulk Sector

[Asia Economy Reporter Yoo Je-hoon] Pan Ocean is making a full-scale entry into the liquefied natural gas (LNG) transportation market.

Pan Ocean announced on the 16th that it signed a 7-year long-term charter contract for two new LNG carriers with the global energy company Shell on the 15th. The contract amount is $306.25 million (approximately 331.8 billion KRW).

According to this contract, Pan Ocean will build two new LNG carriers with a capacity of 174,000 CBM and charter them from 2024 to 2031. Shell holds an option to extend the contract for up to an additional 6 years, making Pan Ocean's long-term contract potentially last up to 13 years. In addition, Pan Ocean has signed an option contract with Shell for one more LNG carrier, which can be expanded up to a maximum of three vessels.

The LNG carriers to be deployed under Shell's long-term contract will be built by Hyundai Heavy Industries. The new vessels will be equipped with X-DF dual-fuel engines capable of using LNG as the main fuel, LNG reliquefaction facilities, and air lubrication systems, making them highly efficient ships. The delivery is scheduled for mid-December 2024, and the ship price is reported to be $372.85 million (approximately 404 billion KRW).

Pan Ocean explained that it entered the LNG transportation market to diversify its business portfolio, which is currently concentrated in the dry bulk sector. Pan Ocean CEO Ahn Jung-ho said, "We have promoted the expansion of LNG-related businesses to quickly respond to the trend of expanding the business portfolio concentrated in the dry bulk sector and the global carbon neutrality movement. Interest in the use of eco-friendly energy is increasing, and we are also considering the introduction of LNG bunkering vessels." He added, "We will strive to become a global leading shipping and logistics company by strengthening not only dry bulk but also grain trading and eco-friendly energy sectors."