Pressurized LNG concept, is it the right answer for the Indonesian problems of stranded / abandoned gas reserves?

 

By Agung Aang on Friday, Oct 28^th, 2011, at 03.45 PM

It has been years and decades, Indonesia is experiencing problem with it’s energy resources, the problem mainly on how to well optimize the utilization and exploration of it’s all natural and energy resources for the benefit of the people. The Indonesia is known to be one of the country who has so enormous natural and energy resources, especially on Natural gas. Becoming one of the big exporting countries of The natural Gas for years, Indonesia is so rich with gas reserves which are scattered almost all over the places through out it’s archipelago territories, covering both on-shore and off shore reservoirs. Unfortunately not all of them are as big as Arun, Bontang, Tangguh and or Masela (recently been developed) in the economic scale. Plenty of them  in fact having only minimum / small scale reservoir, that’s only able to deliver gas less than or in the minimum range of 5 – 20 mmscfd. They are used to be called as “stranded / un-developed gas reserves”. That has in fact made them not so economic to be developed further by only employing the existing conventional technology known in the market.

Believed as of date only less than 50% of the country’s total Natural Gas reserves of about 90.3 Tcf (proven reserves) had successfully been developed for further monetization, the rest are still yet to be developed mainly due to such reason.

Another related problem, the Indonesian have to deal with is the imbalances gas supply-demands through out it’s wide spread territory areas, in lot of cases the gas wells(reserves) or gas supply areas located remotely distances from the gas market areas where all the industries and or power plants consuming the gas are located.

How to transport the gas from the supply areas in to the market areas in such away still within the economies of scale, be it through pipe-line and or shipping, had became another issue here. Again this has to be put in to the wholly considerations, when certain gas reserve is about to be further monetized, as whether the reserve contained is worth for the whole development cost (including plant production cost as well as the transport cost).

The above mentioned 2 main issues had so far always stand before and in fact had prevented them to make further development of many Indonesia’s small (stranded) gas reserves come in to reality. Therefore Indonesia will definitely need an innovation technology that can help them to get away from such hindrances, in the efforts to best utilize their small scale reserves.

                  

Pressurized LNG concept was firstly introduced by ExxonMobil R&D Team in early 2006, similar concept was also introduced very recently by DSME Team. The concept what they called and patented as Cluster LNG.

The concept was in principle offering a new stage condition of the LNG in to the market. Under normal circumstances the conventional LNG was attained at the temperature of –163 deg C in the atmospheric pressure, hence in The Conventional LNG Processing (Liquefaction) Plant, natural gas was liquefied by certain thermal process up to the temperature of – 163 deg C.

Whilst in the new concept of Pressurized LNG, the stage of liquefied Natural Gas was attained and kept at the temperature only up to –110 deg C however instead, the pressure maintained at 20 Bars. In this case the total energy utility consumed in the gas liquefaction processes was much less compared to those consumed for the conventional processing. As the consequences, the cost involved in such process was eventually decreased quite significantly. The decreasing cost were mainly due to the less investment cost (CAPEX)involved in procuring the Plant, because of much less complexity and numbers of equipment involved in the Processing Plant, as well as due to the less no of expenses (OPEX) involved for the utility and consumables used through out the processes.

Decreasing numbers of investment (CAPEX) due to it’s less no of equipments and it’s complexity level, claimed to be as much as 50% compare to the conventional processing plant, thus also happens in the processing cost, as the cost different to bare the energy consumed in the thermal process to bring down the liquefied gas temperature up to –163 deg C compare to the same effort to get the temperature down only up to –110 deg C is quite significant, claimed to be not less than 50% off.

The less level of complexity as well as less numbers of equipment involved in the plant, happens to be because of this newly concept was told to be in tolerance to the lower quality of gas in it’s processing plant (i.e. higher CO2 content, water & sulfur content, etc), therefore no massive gas pre-treatment equipments shall be required in this case. As an illustration a certain maximum standard of several PPM  of CO2 content required by conventional plant, instead this will allow up to 1-2% content.

On top of all above mentioned advantages, on the other hand of course there would always be some trade-off on this new concept technology compare to the conventional one, which was eventually known to be as good as on it’s LNG containment system.

As the LNG would be kept and maintained at 20 Bars of pressures, the existing conventional containment system definitely wouldn’t be able to hold such pressure longer. Therefore a new technology of containment system that is able to bare and retain the 20 bars pressure need to be applied in this newly concept. A specific material and designs as HSLT (High Steel Low Temp), Carbon Steel, even Composites are employed in this new containment system. The rest would be all the same as normal membrane system but with pressurized stages.

This new system/technology will off course also bring the consequences in the cost (CAPEX), especially on the fabrication cost of the tank containment it self, it was told to be as much as 20% – 30% more expensive at a given comparable specs compare to the conventional system. One might have questioned as whether this new containment system would be able to contain any normal conventional LNG, yes it would, if it can bare the pressurized LNG for sure it would be able to contain the conventional one.

More over, it’s also told that at a given volumetric capacity, the new containment system would only be able to contain less no of gas in a certain unit of energy. In fact it could hold only 20% less gas in volume compare to the conventional system, this off course would be of another set back. It has very much correlation with the unit cost of transport / shipment cost of the gas (OPEX) at the end of the day.

 

                

The fact would off course drives the higher unit shipment cost of the gas per certain unit of energy compare to the stage of the shipment using the existing conventional technology.

In a whole, it seems we still need to be careful of before come arrive to the conclusion that the concept is really fit and economically viable for the development and monetization of a small scale (“stranded”) gas reserves in Indonesia. A proper analysis study on it’s pros and cons, as well as a detailed engineering examination and precise calculation need to be done though roughly to be addressed to the remaining doubts of the feasibility of such new concept.

Despite of all doubts that might arise, I would say that the concept is indeed giving some short of hope, in fact I would say that it really make sense, brilliant and convincing enough, sufficed us with an alternative to be able to answer the question as earlier mentioned at the beginning of this note.

Is this really the right answer? Well, it seems like we will have to wait until any pioneer pilot project come to the stage of commercialization to be of sure, in the mean time I would say, yes I do have confident on it. 

End of Oct 2011                               

Tokoh-tokoh muda di balik Panggung Kebusukan yang tiada kunjung berakhir

 

By Agung Aang on Friday, July 29^th, 2011, at 03.45 PM

Sebenernya aku malas untuk memulai tulisan ini, karena aku yakin tidak akan merubah apapun, tidak juga memberikan dampak apapun bagi kondisi masyarakat bangsa yang sedang terjangkit kangker ganas stadium lanjut ini…pheffww.

Ahhh ...biarlah setidaknya aku meneriakkan ini untuk diriku sendiri dengan maksud melepas seluruh energi negatif,..atau setidaknya kelak aku akan malu pada tulisan ini dan segera bertobat…jika suatu saat kelak aku dan kesadaran moral dan intelektual-ku mulai pula terjangkit kangker ganas kebusukan, kemunafikan kronis, akibat virus jahat korupsi yang sedang mewabah ini. Virus yang sudah sedemikian kronisnya menyerang sendi sendi dan syaraf peri kehidupan masyarakat bangsa ini.

Sudah selama berminggu-mingu terakhir ini kesadaran moral dan intelektual masyarakat kita di jejali dan dicekoki dengan penampilan panggung-panggung pementasan kebusukan profesional yang bak panggung teatrikal kelas atas yang celakanya terasa tanpa kunjung berakhir, bergeming tanpa malu terus menampilkan adegan-adegan memuakkan dari aktor-aktor muda briliant yang silih berganti, biarpun para penonton sudah mulai berteriak dan muntah.

Para aktor muda silih berganti menampilkan kebusukan-kebusukan terbaik mereka dari satu scene panggung ke scene panggung berikutnya, tiada malu, tiada segan, tiada sungkan lagi, sungguh ironis jika dilihat dari latar belakang intelektual mereka, mewakili golongan mana mereka berasal, sungguh sangat ironis mereka yang selama ini sangat diharapkan membawa angin perubahan di kehidupan masyarakat bangsa ini, dikagumi karena idealisme dan semangat militansi yang mereka miliki, berakhir dengan bangga mempertontonkan kehilangan nurani mereka, paradoksal yang menyedihkan.

Belum lama berselang penonton benar-benar dibuat muak, semuak-muaknya oleh panggung kebusukan dari aktor muda briliant yang memiliki keahlian di bidang perpajakan, yang sungguh apik mempertontonkan kebusukan-nya selama berminggu-minggu bahkan berbulan-bulan panggung pementasan tanpa henti.

Saat-saat sekarang ini panggung menjadi milik dan beralih kepada aktor salah satu tokoh papan atas Partai Politik Penguasa yang kebetulan juga aktor muda yang dalam sepak terjang kebusukan-nya telah sangat sukses mempertontonkan kebusukan, kemunafikan dan juga kerakusan yang luar biasa merusak, parahnya lagi dalam pertunjukan yang disajikan, aktor muda ini juga sangat sukses mempertontonkan kerjasama yang apik dengan banyak aktor-aktor muda yang lain, bak team sepak bola berkelas dalam melaksanakan kejahatannya secara berjama’ah.

Publik penonton sama sekali tidak tau kapan panggung-panggung ini akan berakhir, terlihat tanda-tanda akan berakhir-pun tidak, mereka hanya menangkap tanda-tanda bahwa kepemilikan panggung akan beralih dari satu aktor kepada aktor-aktris yang lain. Ambang batas kemuakan sudah terlewati, muntah sebagai bentuk protes fisik-pun sudah berulang terjadi, hanya satu pilihan akal sehat yang tersisa yakni “apatis”, dengan terus berdo’a dan berharap pada suatu saat kelak ada yang berhasil membubarkan panggung-panggung celaka ini…Silahkan apatis, asal jangan berhenti berteriak muak, karena di saat kau berhenti berteriak muak disaat itu pula kau membenarkan dan menerima kebenaran kebusukan yang disajikan…amit-amit.

Alih-alih panggung berakhir, mungkinkan panggung akan beralih dan menjadi milik aktor muda yang satu ini?..jika terbukti benar, yang satu ini sungguh sangat menyedihkan. Tidak kurang dari penulis sendiri menaruh harapan besar pada tokoh muda yang satu ini, yang selama ini telah berhasil mencitrakan gerakan moral yang bersih, ber-etika, cerdas, dan santun yang terpancar dari penampilan-nya yang penuh kebersahajaan. Mungkin sudah saatnya kita berhenti menaruh harapan terlalu besar kepada seseorang, terlalu naif berharap seseorang mampu membawa perubahan seorang diri di dalam sistem yang sudah terlanjur busuk luar dalam. Hasilnya adalah apa yang aku rasakan saat ini sambil menyelesaikan tulisan ini, sakit!

Masih relevan-kah saat-saat sekarang ini kita kembali menggali dan mengingat semangat Sumpah Pemuda 1908, Proklamasi 1945, Reformasi 1998, di tengah-tengah gencarnya pertunjukan panggung-panggung kebusukan kemunafikan yang tida kunjung berakhir ini??..Masih ada harapankah akan adanya perubahan di masa-masa mendatang jika tokoh-tokoh / aktor-aktor muda sudah terkontaminasi?..aktor muda yang sudah sangat mahir mempertontonkan keahliannya mengolah kebusukan?..wallahu a’lam

Masih perlukah kita meminta contoh aktor2 (muda) briliant yang dulunya getol meneriakkan idealisme, memperjuangkan kebenaran dan keadilan, tapi giliran sudah berada di dalam sistem kekuasaan justru mahir mempermainkan dan mengolah kebenaran dan keadilan menjadi semata kebenaran manipulatif demi kepentingan pragmatis mereka??..sudah terlalu banyak kawan.

Wahai Pemuda/Pemudi Indonesia dimanakah kau berada?…Ibu Pertiwi membutuhkanmu saat-saat ini, untuk menghentikan segala bentuk panggung-panggung kebusukan yang terjadi, bergeraklah…lawanlah…karena sejarah membuktikan bahwa perlawanan kalian-lah yang selama ini cukup efektif menghentikan segala kemunafikan dan kebangkrutan moral intelektual ini.

Yaa Rabb aku berlindung kepadaMu atas godaan dan ajakan nafsu berkuasa, yang sungguh membutakan…ammieen…

Awal Ramadhan 2011

Profile of LNGC population worldwide

 

By Agung Aang on Thrusday, June 30^th, 2011, at 03.45 PM

Have you guys ever imagine, what is the total population numbers of LNG Carriers from various size and type that is still operating / sailing nowadays? Well, rough guess, from several entrusted sources I had, there are total of abt. 343 units of LNGC vessels from various ages, sizes and types are still operating worldwide now. Off course out of that numbers, there are always set off between newly delivered vessels to the market with numbers of units phased out.

If we’d like to see deeper in to the numbers, if any of you are interesting to know further the profiles and demographic distribution of such population numbers, we can start up with defining the appropriate ways of categorization, as enable us to do proper grouping and clustering all the available information/data's.

Peoples are used to cluster the LNGC under several common categorizations i.e. by ages, by sizes, by types of tank (containment) system, etc.

I. Size Categorizations

OCIMF had introduced a standard categorization, in accordance to the volumetric size of the LNGC’s cargo tank containment (in cub.meter). The categorizations are set as follows;

- Category A vessels : LNGC vessels with cargo tank capacity less then 59,999 m3

- Category B vessels : LNGC vessels with cargo tank capacity in between 60,000 m3 up to 149,999 m3

- Category C vessels : LNGC vessels with cargo tank capacity over then 150,000 m3 and above

The Size profile of the LNGC population, under this categorization is as shown on the following enclosed statistical chart

                                                                                                    

               

It’s obviously seen that the most common size of The LNGC in the market is in the range of Cat.B size, thus means most of LNGC vessels operating in the market nowadays are having capacity size in between 60,000 m3 up to 149,999 m3/. The Cat.B vessels is dominating the population by 72%.

II. Categorizations by Types of Tank (Containment) System

There are at least 3 main groups of Cargo Tank (containment) systems, detailed as follows;

- Membrane Types systems – comprise of all basic membrane technology containment / system i.e. GTT Mk I, GTT Mk III, GT. No.82, 85, 88, GT No.96, etc

- Spherical Types system – Mostly MOSS Rosenberg technology containment / system

- Other Types / Systems – included but not limited to ESSO, IHI SPB, Worm, Cylindrical, Bi-Lobe, etc

The profile is as seen on the following charts

                                                        

It’s obviously seen that LNGC vessels having (adopting) Membrane Type Technology for it’s containment system onboard are dominating the overall population numbers by 65% of the population.

 

III. Ages Categorizations

Normally peoples are grouping the vessel’s age under following terms and norms;

- Below 5 years old – all vessels built no more (less) than 5 years a go

- 5 to 25 years old – all vessels built and operated sometime between last 5 years to last 25 years.

- Above 25 years old – all vessels built and operated more than 25 years back.

IV. Mixed up Categorizations

Some peoples are sometime also doing mixed up categorization in order to get in to a more through rough profile pictures, describing a more complex demographic distribution through out the population.

Herewith are profiles of some Mixed up categorization i.e. Age profile by OCIMF size Categorization, Age Profile by Types of Containment System, Size profile of LNGC by Containment System, etc

 

                 

 

                 

From which we can see at least, that most of LNG Vessels at Cat.B were built between last 5 years to the last 25 years, where else most of Cat.A vessels were built very recently (less than 5 years old).

At the same time, we could also see that most of LNGC vessels built very recently (less than 5 years old) are using Membrane types of containment system.

As to summarize the above outlined, we could conclude at least that The common size and type in the market which dominating the most population of LNGC vessels worldwide nowadays are Cat.B size of vessels with Membrane containment technology / system.

 

Early July 2011

LNG Value Chain – An Introduction to LNG, being as the alternative of a (relatively) clean energy for marine fuel

 

By Agung Aang on Friday, June 24^th, 2011, at 03.45 PM

The Natural Gas, known as “Methane” is believed to be one of the alternative energy beside other fossil energy, that is known to be relatively clean and cheap. It’s relatively clean compare to the other sources of energy such as fuel oil, coal, etc due to methane having less carbon chain compare to others, thus in the combustion process, will produce and release less carbon emission to the atmosphere. That’s why it’s good and safer for the environment.

It’s also relatively cheap since it is believed that the global reserved is still at the sufficient level compare to the other fossil energy that had led to the scarcity all around the world. However the development of the application that uses and consumes Natural gas is still limited nowadays, especially in some third world countries (including Indonesia I guessed). In some modern countries, we saw that the people’s access in to this type of energy had been indulged since last decade.

There are at least two type of technologies (processing & containment) to deliver the Natural gas (Methane) to the customers / end-users, which first is LNG (Liquefied Natural Gas) and second is CNG (Compressed Natural Gas), this time I will start to elaborate further on LNG, we can do The CNG at some other time.

Anyway to get to know further in to this LNG thing, one has to understand first the characteristic of the LNG it self. LNG is the natural gas that has been liquefied by being cooled (thru a thermal process cooling) in to an approximately -160°C (-260°F). LNG ~ 1/600 volume of Natural Gas, making it practical to transport by ship, Can be stored and transported in insulated tanks at standard atmospheric pressure. Flammable when mixed with air concentrations between 5% - 15% (methane). Not generally considered as an explosive.

The LNG Value chain from the source fields / gas well in to the end-user are described as per-herewith diagram

 

            

As obviously seen, Natural gas which was produced from gas well, brought up through gas pipelines in to The Processing Plant where gas were liquefied and keep in liquid forms for further shipment process via an export Terminal. As earlier mentioned, gas volume in liquid faction is 1/600 times of it’s volume in original gas form, making it more practical and easier to handle during transport.

Then an LNGC will bring the gas, in liquid forms (LNG), which were kept onboard within an enclosed/insulated cryogenic containment from the Export Terminal in to the Import / Receiving Terminal, where the LNG is discharged / un-loaded in to storage and another Processing Plant, called Re-gasification Plant, where the liquefied gasses is changed back in to the gas forms before it’s virtually delivered and further distributed in to the end-users (i.e power plant, industries, etc) through gas pipeline facility.

There are at least two (2) types of The LNG Receiving Terminals being developed recently, first is On-Shore based Terminal where the Storage and Processing (Re-Gasification) Plant were located on-shore, and second is Off-Shore Terminal where the Storage and processing (Re-Gasification) Plant were located Off-Shore, it could be in a form / module of Floating Storage and Re-Gasification Plant (FSRU Barges or Vessels) and or Fixed Permanent Floating Terminal (using Gravity based, piled/fixed platforms, etc)

There are off course several pros and cons between these 2 types of Terminals, however peoples tend to explore more on the Off-Shore types recently due on the following reasons i.e. almost no land-acquisition involved (considering potential social risks), relatively faster to build, relatively less capital investment, less complex permit as well as the most issues on the mobility idea.

The most issues involved in this choice is it’s high sensitivity to the weather changes, especially rough se-condition.

Before coming to the development and application of the LNG for Marine Fuel on the next parts, to close this chapter, author would like to express his deep concern on, as of date there are none of such kind of Receiving (Import) Terminals were ever built and developed for and within Indonesia. Without any of such infrastructure made available, no wonder if the Natural Gas utility within Indonesian people in general is still low compare to other developing countries. What has become sad contradiction is, Indonesia as one of the world biggest Natural Gas Producers, sell it’s Natural gas for cheap to other countries, where it’s own Indonesian people does not have sufficient access to also enjoy the benefit of Natural Gas due to lack of (receiving) infrastructures made available.

Really sad…

End-June 2011

Sinopsis Running Cost Pengoperasian Kapal - Terms for dummies II

 

by Agung Aang on Thursday, June 23rd, 2011 at 2:45pm

Seperti yang sudah disampaikan pada tulisan di Bag.I terdahulu (i.e.Sinopsis Running Cost Pengoperasian Kapal – Term for dummies I) istilah Running Cost dalam pengoperasian kapal, adalah bagian dari komponen biaya OPEX (Biaya total pengoperasian Kapal), diluar komponen biaya Voyage yang harus ditanggung oleh pihak Owner/Operator kapal pada waktu mengoperasikan kapal-kapal armada mereka.

Jika pada tulisan terdahulu sudah disampaikan secara detail kelompok-kelompok biaya apa saja yang masuk ke dalam kategori komponen biaya ini, maka pada tulisan kali ini penulis akan mengajak untuk melihat besaran kontribusi dari masing-masing kelompok biaya tersebut beserta proporsionalitasnya terhadap keseluruhan biaya Running Cost pengoperasian kapal.

Kita tahu bahwa Komponen Biaya Running Cost itu terdiri dari kelompok-kelompok biaya Manning (Crewing), Technical (M&R, Supplies, Stores, etc), Insurance (H&M dan P&I), General Administration & Others. Pertanyaan selanjutnya adalah seberapa besar-kah kontribusi dalam persen (%) dari masing-masing kelompok biaya tersebut terhadap keseluruhan Biaya Running Cost kapal? Bagaimana juga proporsionalitas dari masing-masing kelompok biaya tersebut terhadap keseluruhan Biaya Running Cost dari berbagai jenis dan type kapal dan operasionalnya?

Sebagai langkah awal penulis akan mengajak melihat gambaran breakdown detail kelompok biaya Running Cost dari berbagai jenis dan type kapal sebgaimana tertuang dalam tabel riset yang dipublikasikan oleh lembaga riset pasar Drewry seperti tersebut di bawah ini.

                  

Jika dicermati lebih jauh tabel tersebut, besaran dari masing-masing kelompok biaya pada setiap jenis dan type kapal akan sangat bervariasi, namun demikian akan dapat terlihat pola yang hampir sama terjadi pada besaran kontribusi dari masing-masing kelompok biaya tersebut terhadap komponen biaya Running Cost keseluruhan pada setiap jenis dan type kapal yang berbeda.

Hal ini menarik untuk dicermati lebih jauh karena dari sejauh pengalaman penulis selama ini mengelola biaya running cost dari berbagai jenis dan type kapal, memang diyakini adanya suatu pola yang sifatnya umum (kurang-lebih berlaku untuk semua jenis dan type kapal) yakni pada besaran kontribusi dari masing-masing kelompok biaya di atas terhadap total komponen biaya running cost (secara keseluruhan) kapal.

Dari hasil telaah dan kajian penulis selama ini, pada umumnya akan terlihat pola distribusi kontribusi sebagaimana terlihat di bawah ini;

 

                  

 

Dari sana terlihat bahwa terdapat 2 kelompok biaya utama yang selama ini mendominasi kontribusi terhadap total komponen biaya running cost kapal yakni kelompok biaya untuk Crew / Manning dan kelompok biaya Insurance (pembayaran premi H&M dan juga P&I), kedua kelompok biaya ini mendominasi kurang lebih dua pertiga dari total biaya running cost keseluruhan.

Bahkan kelompok biaya Technical (terdiri dari biaya-biaya maintenance, repair, service, supplies, stores, dll) yang selama ini dianggap paling bertanggung jawab terhadap naik-turunnya pemakaian biaya running cost kapal hanya berkontribusi kurang dari sepertiga total biaya running cost secara keseluruhan. Kebanyakan orang akan selalu berfikir bahwa untuk mengontrol ketat pemakaian anggaran biaya running cost harus dilakukan terhadap realisasi penggunaan anggaran biaya MRS (maintenance, repair dan supply). Solah-olah kelompok biaya ini senantiasa melekat dan terasosiasi kepada pelaksanaan program efisiensi dan pengetatan / pengontrolan anggaran selama ini.

Hal tersebut terjadi tentunya bukan karena tanpa sebab-sebab tertentu, salah satunya adalah karena sifat dan nature pengeluaran / realisasi expense-nya yang cenderung merata sepanjang kurun waktu anggaran, akan sangat berbeda dengan misalnya sifat pengeluaran kelompok biaya Insurance, i.e. pembayaran premi yang hanya terjadi sekali dalam satu periode anggaran. Dan tentunya juga karena kecenderungan kita melihat kelompok biaya MRS (Technical) sebagai satu-satunya kelompok biaya yang paling memungkinkan untuk dilakukannya penyesuaian kapan-pun di sepanjang paruh waktu periode anggaran, akan berbeda kasusnya jika kita bandingkan dengan biaya wages (gaji crew), yang terikat oleh kontrak perjanjian sehingga tidak dimungkinkan terjadinya perubahan pada setiap saat.

Untuk itu penulis mengajak pembaca untuk kembali berfikir dan melihat secara logis dan proporsional pada saat akan melaksanakan program pengawasan dan pengetatan (efisiensi) anggaran, bukankah sesuai pendekatan PARETO kita harus memulai dari sebagian kecil hal yang membawa pengaruh ke sebagian besar hal?

Adalah wajar jika kita diharuskan untuk melakukan pengetatan / pengontrolan secara ketat realisasi pengeluaran pada pos anggaran running cost, kita mulai dari 2 kelompok biaya utama yang berpengaruh (berkontribusi) paling besar tersebut, yakni kelompok biaya Manning dan juga kelompok biaya Insurances.

Demikian sharing kali ini, semoga bermanfaat…ammien.

End of June 2011

Ship New Building, how to define fair Price? How does cost distribution of a given Price look like?

By Agung Aang on Tuesday, June 14^th, 2011, at 02.02 PM

How to judge the fairness of a given New Building Price of (for example) a 6,000 DWT single Decker double hull, double bottom General Cargo vessel with IACS Class Notation for Ocean going? or New Building price for a 5,000 DWT double hull, double bottom, IMO Type I/II Oil & Chemical tanker, with IACS notation for coastal service, built locally?
To be able to do so, one has to know exactly what factors could drive the Shipyard/Shipbuilder to come up with a certain selling price for New Building construction. There are at least 2 main factors that might influence The Shipyard/Shipbuilder in defining their best quoted price for New Building in a given time.
First and foremost is The External factors, factors which are beyond their power to control, such as;
- Supply & demand situation in the market, sometime is The Builder/Seller market but some other time is a Buyer market.
- New Rules & Regulation applied, i.e. by Class, IMO, Statutory, Local Government, etc
- Steel and other commodities price level, even though some attempts could be afforded by The Shipyard to peg or hedging the price, still on some certain extends it’s beyond their competence to keep.
- Global Energy price level
- Currency exchange & borrowing rates level
- Old Tonnages phasing out rate & Scrap value rate
- Taxation scheme, etc

Secondly is The Internal factors, factors which are still within their competence to control, those are including but not limited to as follows;
- How good they manage their production cost level to stay efficient and competitive.
- How good their production system is, to maintain schedule & production phase.
- How good their project management is, one right time and one time right, right in time without fail & repetition.
- How good they manage their overhead allocation for the project.
- How good they raise and manage their project financing
- How good they manage the project risk, etc

On Shipyard / Shipbuilder’s perspective, New Building Project is normally having relatively less return compare to any Repair & Conversion Project. Thus the profit expectation for a New Building project is quite marginal compare to other project types. One of the reason is just because of the New Building project is typically having longer turn around time, hence the cost of fund is very much involved through out the project period of time.
What are the major groups of production cost, of a New Building Project, and how are they well distributed in forming a given New Building price?
The figure below is showing the distribution pattern of each group of The Production costs of a new Building project that drive the Price.

               

* The figure is extracted merely from the author’s extended experiences in handling New Building Projects both at Shipyard perspective’s end as well as Owner perspective’s end. Wisely it shall be treated as guidance only, the exact and actual percentages of each might be vary on every certain specific projects.


Where the detailed of each (in the order of the biggest portion) are as follows;
- Machinery Group, in the region of 40% up to 45% – consist of all costs incurred to procure and install all the machineries and systems onboard i.e. main propulsion system, main engines, auxiliaries engines, boilers, pumps, compressors, gearbox, shafting, steering system, heat exchangers, etc
- Hull Part Group, in the region of 35% up to 40% – consist of all costs incurred to procure and fabricate all the Ship’s Hull and Deck Dept onboard i.e. Hull steel construction, rudder construction, mooring system, life saving appliances, deck piping, cargo handling systems, accommodation, coating, etc
- Electrical Group, in the region of 7% up to 10% – consist of all cost incurred to procure and install all the electrical system onboard i.e. radio communication systems, radar systems, satellite communication system, cabling, lighting, Navigation system, etc
- Fitting & Installation Group, in the region of 7% up to 10% – consist of all cost for Labor, workmanship, handling facility, etc
- Design & Class cost, in the region of 3% up to 5% – consist of all cost incurred to procure Ship’s design, Class survey & inspection service, Class Plan approvals, testing, trials & commissioning, etc
- Other miscellaneous Group, in the region of 2% up to 3% – consist of all cost incurred for the Project’s cost of fund, ceremonial, etc
The above mentioned distribution pattern, in general is likely and widely applicable to the new building of all types of vessels / ships, be it General cargo, tankers, break bulkers, bulkers, supply vessels, etc, should there be variety on the portions/percentages of each groups, let say on a particular case of the new building of a specific types of vessel i.e. FSO, FPSO, FSRU, DSV, and or other Offshore support vessels, etc, believed it won’t change the main pattern in a whole.

It’s obviously seen from such pattern, that the 2 most contributing groups are Hull and machinery, where both are contributing total 75% of the Ship’s New Building Price, these are the areas that contributing most to the New Building price. In fact the Design and Class only less contributing compare to the others, all together only less than 5% contribution to the Price.

Last but not least, by understanding the pattern well, hopefully we can have a better basis for evaluation and eventually judgment of the fairness of the Ship’s New Building Price given by any Shipyard.

June 2011

Shipping Business in General – Terms for dummies I

By Agung Aang on Monday, June 13^th, 2011, at 01.42 PM
Some may ever think that shipping is such a complex world having so many terms, which some are really confusing and some time conflicting each other, the idea of serving this Note is to help one to understand better The General Shipping terms in a much easy way.
The basic economic motive of shipping is providing service to deliver/transport goods from one point of pick up (point of origin) to the point of delivery (destination point), involving two main parties i.e. The Shipper, in this case is the owner of the goods (cargo) as well as The Carrier, The one who virtually delivers the goods (cargo) to the destination, in this case is The Ship’s Owner/Operator. There are several ways of shipment i.e. Air-freight, Sea-freight and Land based-freight (trucking, train, etc). This note will serve to elaborate more on the Sea-freight, even though some basic principles might be similar and also applicable for the other 2 shipment ways.
There are two main types of Shipping, first is Liner Shipping, where sailing time is scheduled and freight rates are based on certain standard tariff, mostly for passenger, general cargoes and containers. The second one is Tramp Shipping, where sailing time is not scheduled; freight rates are negotiated and formed individually, type of cargo might be vary from general cargoes up to specific industrial cargo such as chemicals, oil & gas, coal, and other project cargoes.
In term of operating / running a Ship in the Shipping business, herewith are several basic/major shipping contract types (Charter parties), commonly used and quite popular in the market, complete with each explanations as;
- Voyage charter - It is a contract between Ship owner and charterer for transportation of a specified amount of commodity from loading port to a destination, where The Ship Owner is responsible for all the cost incurred. Normally rates are sets on a Dollar per-Ton basis of cargoes carried (Dollar per-unit cargo weight carried)
- Contract of Affreightment (CoA) -  It is a contract between Ship Owner and charterer for transportation of a specified amount of commodity from loading port to a destination over a certain agreed period of time (i.e. 1 – 2 years) where The Ship Owner is responsible for all the cost incurred. Normally rates are sets on a Dollar per-Ton basis of cargoes carried (Dollar per-unit cargo weight carried)
- Trip / Tramp Charter – The contract which set and only valid for one Trip, where The Charterer is responsible for all the Voyage Costs incurred such as fuel-bunker cost, fresh water cost, ports & agency costs, etc. Freight rates are normally set on the basis of Dollar per-day throughout the no of day’s charter.
- Time Charter (T/C) - Charterer hires the vessel for a specified period of time and takes the commercial control over the vessel, where The Ship Owner is responsible for operation and capital costs, whilst Charterer is responsible for all the voyage costs. Rates are normally set on a Dollar per-day basis throughout the days of the charter period.
- Bareboat Charter - Charterer hires the vessel for a very long (specified) time, normally the whole economic life of the vessel, where Ship Owner is responsible for the capital cost only, and Charterer is responsible for all other costs. Rates are normally set on Dollar per-day basis throughout the days of the charter period. Used to be quite popular on the Energy sector market.
Along the way, some other types of lately developed contract/charter are also introduced in to the market, thus basically are the latest developed / modified version of the above mention basic types i.e.;
- Back – to – back Charter – Basically is a modified type/version of a T/C contract where the Ship owner deals with the Charterer through someone else’s, upon an agreed marginal fee’s.
- Modified Bareboat Charter – Basically is a modified type/version of a Bareboat Charter where The Ship Owner is not only responsible for the capital cost, but also some other Operational Cost (Opex) i.e. crewing cost, P&I Insurance, H&M Insurance, etc
Diagram as shown below will show the detailed flows of thought on Ship owner’s perspective with regard to the split up responsibilities and cost sharing composition amongst several types of basic contract that the ship might have upon its operation.
                   
*Figure diagrams taken from one of slide presentation from Navigate Consulting, June 2008
Thus obviously seen the distinction amongst several areas of shipping businesses over Owning, Running and Operating a Ship or a fleet of ships, complete with each borne cost responsibilities.
That’s all what I can share on this first chapter, hopefully it could be useful and come of your help in understanding better the basic of shipping business. Insya’Allah will continue with Ship Asset Procurement & Selection on the next chapter, on some other time.
June, 2011