The South Korean government will order 140 liquefied natural gas (LNG) vessels by 2025 and provide 1.7 trillion won ($1.5 billion) in financial aid to prop up the country’s ailing shipbuilding industry.
The shipbuilding assistance package was announced Thursday after a government meeting chaired by Prime Minister Lee Nak-yeon.
While measures in April were aimed to help large shipbuilders, the latest scheme is geared more toward small and midsized builders, the government said. There are 78 such companies in Korea, whose combined revenue stood at 601.2 billion won last year.
The government plans to order a total of 140 LNG vessels by 2025, a deal estimated to be worth about 1 trillion won. To start, it will replace two large emissions-emitting tug boats with cleaner LNG-fueled ships next year. It is also reviewing a mandate to direct all state-owned ships to shift to LNG from 2020.
Seoul’s push for LNG coincides with the global movement toward tighter emissions regulations. LNG is rapidly being adopted as a marine fuel with the expansion of emission control areas, sea areas where sulfur emissions are more strictly regulated than at open sea. Ships operating in these areas must use ultra-low sulfur diesel or advanced scrubbers, prompting the transition to cleaner fuel alternatives like LNG.
To aid financially-strapped shipbuilders and equipment makers, the government will also put aside a 700 billion won fund and extend maturing loans worth about 1 trillion won.
By Lim Sung-hyun and Kim Hyo-jin