Hanwha entities to build US-flagged LNG carrier

Hanwha Shipping, a US subsidiary of Korean shipbuilder Hanwha Ocean, on Tuesday said it ordered a liquefied natural gas carrier valued at roughly $252 million from its own Pennsylvania-based unit Hanwha Philly Shipyard.

Under the agreement, the ship will be built in Korea and flagged in the United States. It is slated for delivery in the first half of 2028.

The deal comes as the United States works to revive domestic shipbuilding and expand its fleet of commercial and military vessels. Hanwha Systems and Hanwha Ocean bought Philly Shipyard for $100 million in December.

"This agreement looks to be a 'first step' in building out US shipyard capacity," said Jefferies shipping analyst Omar Nokta, who noted that the US is the largest LNG exporter with a market share of nearly 25 per cent.

Hanwha Shipping said the deal was the first US order for a domestic-flagged LNG carrier in nearly 50 years.

The agreement, "reinforces Hanwha's global leadership in LNG carrier construction, which we are eager to replicate in the US," said Ryan Lynch, CEO of Houston-based Hanwha Shipping.

Most of the vessel will be built at Hanwha Ocean's plant in Geoje, South Korea, the companies said.

Workers from Philly Shipyard will travel to Geoje for training, a Hanwha Shipping spokesperson said.

Philly Shipyard will oversee regulatory compliance and safety certifications required for the ship's US registry.

Earlier this year, the United States Trade Representative said LNG producers would be required to transport one per cent of their exports on US-built ships starting in April 2029. That percentage would escalate to 15 per cent in April 2047 and beyond.

Hanwha Ocean said the contract is valued at 348 billion South Korean won ($252 million) and has an option for an additional vessel.

(Reporting by Lisa Baertlein in Los Angeles; Editing by Daniel Wallis and Cynthia Osterman)