Japan Revives Shipbuilding Ambitions in LNG Carrier Market Challenge

Japan's shipbuilding industry is on the cusp of a revival, threatening to disrupt South Korea's dominance in the liquefied natural gas (LNG) carrier market. Namura Shipbuilding, a prominent Japanese shipbuilder, is exploring the construction of a new dry dock for LNG vessels at its Imari yard in Saga Prefecture, with a target completion date of 2035.

The proposed facility would accommodate LNG carriers, ammonia transports, and other advanced energy vessels, with an investment potentially reaching 100 billion yen (approximately $630 million). The project may receive state backing. This move marks Japan's first major shipbuilding dock since Imabari Shipbuilding inaugurated a facility in Marugame, Kagawa Prefecture, in 2017.

Japan's land, infrastructure, transport, and tourism ministry convened representatives from Namura, Imabari, and Kawasaki Heavy Industries to discuss creating a reliable domestic framework for LNG carrier production. The ministry emphasized the goal of achieving full self-reliance in constructing these vessels.

Japan held the top position in global shipbuilding until the 1990s, when Korea assumed leadership in the 2000s, followed by China's rapid ascent in the subsequent decade. As of July this year, China captured 75 percent of worldwide new ship orders measured by compensated gross tonnage, with Korea at 17 percent and Japan at 2 percent.

Prime Minister Sanae Takaichi has integrated the revitalization of shipbuilding capacity into Japan's economic security framework. She described shipbuilding as a vital industry underpinning daily life, economic activity, and national defense. Japan has designated shipbuilding as one of 17 strategic fields within its growth blueprint, targeting roughly 1 trillion yen in combined public and private investment by 2035.

Local media have suggested Tokyo is contemplating subsidies to close the cost disparity with Korean and Chinese competitors. Yang Jong-seo, a senior researcher at the Export-Import Bank of Korea, noted that Japan relies heavily on LNG imports and represents a significant buyer in this market. He warned that if Japan begins constructing these ships domestically, it would correspondingly reduce the available market share for others.

Industry observers do not anticipate Japan posing a significant challenge in the near term. Japanese yards lack substantial recent experience with membrane-type LNG carriers, which have emerged as the industry standard. Furthermore, Japan's shipbuilding workforce has diminished as the sector contracted following the 1990s, presenting another hurdle to rapid capacity expansion.

Japanese firms are exploring technical partnerships with Korean companies to facilitate the restoration of LNG carrier manufacturing. Yang cautioned that shipbuilding expertise constitutes a core national asset, making any collaboration with a potential rival a delicate matter requiring careful deliberation.