Chapter 209: Impact

Meanwhile.

After more than two years of capacity expansion, the New Luzon Shipbuilding Company had developed an annual shipbuilding capacity of 7 to 8 million deadweight tons. They could now produce everything themselves, from small riverboats to transport ships in the 100,000-ton class.

This year had been particularly noteworthy. Thanks to the application of new materials, along with their in-house production of precision components and large gas turbines, the shipyard had achieved 96% domestic production of its parts.

Aside from a few electronic devices, they could now produce nearly all other components themselves.

In fact, the shipyard only used imported electronics on its civilian vessels. Their military ships were equipped with things like bio-chips and bio-sensors, and did not use any imported electronic equipment.

As for the current "three musketeers" of global shipbuilding—South Korea, Huaguo, and East Japan—they were now paying close attention to Luzon, this newly risen power in the industry.

Take Hyundai Heavy Industries, Daewoo Shipbuilding, and Samsung Heavy Industries, for example.

These three South Korean shipbuilding giants were all among the top ten shipyards in the world. Hyundai Heavy Industries, in particular, was the largest shipyard globally.

Although Luzon’s shipbuilding capacity was less than one-fifth of South Korea’s, Hyundai, Samsung, and Daewoo did not underestimate the New Luzon Shipbuilding Company. On the contrary, they now saw it as a massive threat.

This was especially true for Samsung Heavy Industries, whose core business was the production of LNG carriers.

Park Hyo-yeong, the Vice President of Samsung Heavy Industries, was at their shipyard on Geoje Island.

However, this time he wasn’t there to inspect the shipbuilding process, but to visit one of the marine technology research and development departments.

Park Hyo-yeong looked at the gas cylinder before him. "So this is the special gas storage material developed by the Luzon people?"

"Yes, Mr. Vice President," replied Li Changtai, the chief engineer of the LNG project, his expression grave.

Ever since the Homo Sapiens Company launched gas cylinders containing Crystal Sponge in Luzon, they had attracted a great deal of attention from various parties, especially from related industries.

Because Luzon is an island nation, those who attempted to smuggle the Crystal Sponge-filled cylinders were lured into traps and then vanished without a trace.

Therefore, although many powers knew of the technology’s existence, none had managed to obtain a sample.

It wasn’t until the Homo Sapiens Company established joint ventures in Siam and Malaysia a while ago that some of the cylinders were finally smuggled out.

It was only then that Samsung Heavy Industries managed to acquire a sample of the Crystal Sponge through smuggling channels.

Li Changtai continued, "Mr. Vice President, this special gas storage material can store over 500 kilograms of methane per cubic meter, which is only slightly less than liquefied natural gas. But that’s not the crucial part. The most critical point is that this material doesn’t require low temperatures or high pressure."

Park Hyo-yeong was no amateur; he naturally understood what this meant. "In other words, their gas transport costs will be lower than our LNG carriers?"

"Yes. That is beyond doubt," Li Changtai confirmed with certainty.

As the chief engineer for LNG carriers, he was all too familiar with the challenges of transporting LNG. The main issue was the need to continuously maintain low temperatures and a perfect seal.

If the low temperature couldn’t be maintained, an entire shipload of liquefied natural gas would rapidly expand.

At that point, the LNG carrier would have only two options: either vent the gasified natural gas into the atmosphere or wait for the expanding gas to blow the entire ship sky-high.

This continuous, low-temperature liquefied transport required specialized refrigeration equipment; ordinary cooling systems were completely useless.

This meant specialized cryogenic refrigeration units, Invar steel storage tanks that don’t deform at ultra-low temperatures, sophisticated monitoring systems, and backup power generation and distribution systems (at least two sets).

Furthermore, the production of LNG carriers also faced a patent issue.

Despite the major shipyards in South Korea and Huaguo holding over 90% of the global market share for LNG carriers, they weren’t necessarily profitable.

Park Hyo-yeong was keenly aware of this situation. Samsung Heavy Industries’ profit margin on LNG carriers was only about 5% of the order price.

For example, on a large LNG carrier that costs 200 million US Dollars to build, Samsung Heavy Industries would only make 10 million US Dollars in profit.

However, Samsung Heavy Industries had to pay around 10 million US Dollars in patent fees to the GTT Company of France. This wasn’t a one-time buyout; for every single LNG carrier, they had to pay a patent fee equivalent to about 5% of the order price.

This fee was unavoidable. After all, GTT Company’s cryogenic containment system for natural gas was the core technology for modern LNG carriers. Any shipbuilding company that wanted to build LNG carriers for global operation had no choice but to obediently pay up.

Now that another technological path had appeared before them, it was no wonder that shipbuilding companies like Samsung Heavy Industries, Hyundai Heavy Industries, and Daewoo Shipbuilding were taking it so seriously.

"Chief Engineer Li, can that gas storage material be replicated?"

"I’m sorry. I’ve been discussing this with the materials lab for over half a month, and they say it can’t be mass-produced," Li Changtai said, his expression somewhat dejected.

Park Hyo-yeong’s brow furrowed. "Why can’t it be mass-produced? Does it use special raw materials? Or rare-earth elements?"

But Li Changtai’s next words sent a chill down Park Hyo-yeong’s spine:

"Based on the material analysis, this storage material is a new material formed by a biological nanostructure. We can replicate a similar nanostructure at a laboratory scale, but the problem is we can’t mass-produce it—especially not at a low cost."

Park Hyo-yeong recalled the intelligence from their commercial investigation department. The applications in places like Luzon, Hongsawaddy, and Siam indeed showed that the production volume of this storage material was massive.

The storage material produced by the Homo Sapiens Company wasn’t just used in methane transport ships. It was also used in large Methane Storage Tanks in ports and various cities, large storage tanks at methane fermentation plants, onboard gas cylinders for vehicles, large gas storage tanks at thermal power plants, small household gas cylinders for daily use, and gas cylinders for emergency power generation.

With such a huge production volume, if the production cost were too high, it obviously wouldn’t have been put into commercial use so quickly.

"For the storage material we replicated in the lab, the production cost is about 2.73 million US Dollars per cubic meter. Even with mass production, it would be difficult to lower the cost below 500,000 US Dollars per cubic meter."

Hearing this cost, Park Hyo-yeong’s heart sank.

An LNG carrier has a transport capacity of over 100,000 cubic meters. To switch to the new storage material, they would need roughly 200,000 cubic meters of it.

Forget 500,000 US Dollars per cubic meter—even at 50,000 US Dollars per cubic meter, Samsung Heavy Industries couldn’t afford to play that game.

They were in business to make a profit, not to lose money.

The prohibitively high cost of replicating the storage material meant that Samsung Heavy Industries and other shipyards would be unable to produce it themselves for a long time to come.

But Park Hyo-yeong saw a tremendous crisis looming.

The methane transport ships from the New Luzon Shipbuilding Company were already appearing in fleets across Southeast Asia and the Ceylon Ocean.

According to data from international shipping agencies, the New Luzon Shipping Company currently had a total of 173 methane transport ships. Although the vast majority were dual-use transport ships with a displacement of around 20,000 tons, their total tonnage had already surpassed 5.3 million tons.

Moreover, from Park Hyo-yeong’s perspective, those dual-use transport ships posed an even greater threat.

After all, when a Samsung Heavy Industries LNG carrier traveled to West Asia to transport natural gas, it had to make the outbound journey empty. Traveling five or six thousand kilometers with an empty hold was essentially a complete waste.

But the ships of the New Luzon Shipping Company could transport large quantities of goods to the Persian Gulf and then carry methane on the return trip.

This meant they were transporting cargo on both legs of the journey, eliminating any downtime. Combined with the fact that they didn’t need a cryogenic containment system, their costs were reduced by another huge margin.

No wonder Park Hyo-yeong was on such high alert. New Luzon’s cost advantage in transportation was too obvious. It would inevitably exert immense reverse pressure on the LNG carrier market.

If they couldn’t solve this problem soon, Samsung Heavy Industries’ LNG carrier business was doomed, sooner or later.

In fact, Samsung Heavy Industries was already feeling the impact.

Samsung Heavy Industries had originally planned to shut down its Samsung Shipyard at Mingzhou Port in Huaguo this September, but that had now been moved up to July because the shipyard’s business had declined.

After mulling it over for a long time, Park Hyo-yeong decided to contact the heads of Hyundai Heavy Industries, Daewoo Shipbuilding, and other companies to discuss how to deal with the threat from New Luzon.