GAS LNG 30 December, 2022 11:30 am   

Poland’s perfect LNG timing in South Korea


Two PGNiG/Orlen gas carriers, which were ordered from a Korean shipyard, have received names. Both vessels were christened on 13 December 2022 in Ulsan, Korea. Why are these LNG tankers so important not only for Orlen? – asks Mariusz Marszałkowski, editor at

The christening of ships and vessels is an important and uplifting ceremony in the maritime tradition. This was no different in the case of two LNG carriers (LNGC) built as part of contracts with PGNiG/Orlen. The first two vessels in the fleet of Knutsen OAS, a Norwegian shipping company and owner of the units, which will provide services to the Polish company as part of a long – term lease, before the naming, wore side numbers: Lech Kaczyński no. 3243 and Grażyna Gęsicka no. 3244. These ships were built at the Korean shipyard Hyundai Heavy Industries in Ulsan under a contract from 2020. The deal provides for a long-term charter of two units from the Norwegian Knutsen OAS, which will be the owner of both units, but will provide commercial services as requested by PGNiG/Orlen. Both ships will be operated by the Norwegians, who will manage them and provide the crew. PGNiG/Orlen will organize the work of the units.

According to the contract that was signed with Knutsen OAS, the lease will last 10 years with the possibility of extension. On December 22, the first of the carriers, Lech Kaczyński, left the port of Ulsan on its first voyage. According to the AIS system, the unit is headed to Singapore, where it is expected to arrive on January 1, 2023.

The two new gas carriers can transport 174,000 cubic meters of LNG, which after regasification will add 100 million cubic meters of gas to the gas grid. Such an amount of gas in the winter, at a temperature oscillating around zero degrees Celsius, should be enough to cover about two days of gas demand for the entire country. These units are about 300 meters long. These are not the largest ships of this type operating across the world. The market has to offer, among others, Q-max vessels, which can carry over 210 thousand cubic meters of LNG.
However, the advantage of the smaller unit is that it is much more flexible in terms of its ability to anchor at global ports and LNG terminals. Therefore, it was decided not to invest in the biggest carriers. A big advantage of the new LNG tankers is also their drive and specialized equipment. They are propelled by dual-fuel engines, which can burn both fueloil and gasoil, i.e. marine fuel oil or diesel. In addition, both units can use as fuel… the LNG they carry. However, it is not a first choice fuel, but an “addition” that becomes available as a result of the so-called boil off gas (BOG). Despite the fact that the coating of the LNG transport chambers is sealed and is intended to maintain a constant low temperature of the transported cargo, due to, among others, the waves, the space between the upper haul and the level of the liquefied gas heats up. Gas transported at a temperature of -162 degrees Celsius begins to evaporate and collect under the cover. Too much gas could endanger the entire ship. Hence the ability to “pull” the collected, evaporated gas and burn it for propulsion or energy purposes.

This method of “dealing” with boil off gas, however, is archaic and simply not economically viable these days. Of course, the ship still has the ability to burn the evaporated gas, but given the price of the raw material and the contract provisions, it is more profitable to use the latest technological solutions, including Reliq, which involves the re-liquefaction of gas into LNG. Most modern LNG tankers are equipped with machines that can re-liquefy the evaporated LNG. Due to BOG, the previous generation of LNG carries could lose even 6 percent of the transported cargo. Today, thanks to the re-liquefaction, the loss is less than one percent. Less gas burned and lost during transportation means greater economic profitability of gas supplies from producers to customers-especially at a time when gas prices are at historically high.

Perfect LNG timing

The acquisition of the gas carriers and their timely commissioning becomes crucial in the context of the current energy crisis. The availability of gas supply contracts is one issue. However, equally important in the case of LNG, is the ability to transport the cargo to a selected target destination.

Everyone who is looking for an alternative to Russian gas is now learning this. The high demand for LNG causes a dizzying increase in the prices of charter units transporting liquefied gas. On top of the high demand, the problem is the supply of… LNG carriers. There are about 9,000 tankers of various types around the world that carry oil, including more than 900 units of the VLCC class, i.e. supertankers, that can transport more than 2 million barrels at a time (for comparison, Poland consumes from 500 to 700 thousand barrels per day ). In the case of gas carriers, their number is about 700 units, which, in view of the growing interest in this type of fuel, is far from satisfactory. Despite the continuous, new orders for the construction of such vessels, the production capabilities have limits. One of the largest shipyards in the world and the largest producer of LNG carriers, can put together between 12 and 30 units a year, depending how many other vessels have been contracted, e.g. container ships or LPG carriers.

Apart from the fact that the capacity to build LNG carriers is limited, the other problem is that this type of ships is difficult to construct. Each unit of the type ordered by Knutsen for PGNiG/Orlen consists of four chambers. Each chamber is about 14 stories high. Inside it is lined with a special sheet of stainless steel. Only a few shipyards in the world have the technological capacity and skills to install such chambers. Despite the fact that Hyudnai Heavy Industries is one of the largest producers (since 1994, more than 80 carriers have been launched there), the construction of one LNG tanker takes between 24 and 30 months, depending on the project.

It is therefore not possible for new LNGC units to quickly appear on the market, which will put pressure on the global LNG freight market for the next few years, especially since Germany, a giant player, and its at least four LNG terminals will enter the market as a recipient.

Despite the current problems related to the availability of LNG and its carriers, for Poland the ordered ships will arrive at the perfect moment. In 2023, PGNiG entered into two contracts with Venture Global – for gas supplies from the Calcasieu Pass and Plaquemines terminals. Annual supply volumes from these two terminals are expected to be more than 5.5 million tons of LNG, or 7.5 billion cubic metres after regasification. Both contracts are in the Free on Board (FOB) formula, which means that the buyer is responsible for the delivery of cargo to the terminal designated by themselves. This gives a lot of flexibility in handling the load. However, in order to fully benefit from the FOB agreement, it is necessary to have competence in the field of cargo transportation. Thanks to the agreement with Knutsen, PGNiG acquired such capabilities.

PGNiG/Orlen is to acquire eight LNG carriers. Two of them, i.e. Lech Kaczyński and Grażyna Gęsicka will become operational in 2023, two more-probably bearing the names Ignacy Łukasiewicz and St. Barbara will be launched in 2024, and four more in 2025. This amount of gas carriers will fully satisfy the implementation of the previously signed US contracts in the FOB formula.