Headlines heralded the announcement this week of an order for a liquefied natural gas (LNG) vessel to be built at a Philadelphia shipyard, the first of its kind in the U.S. in almost 50 years.
Hanwha Ocean and Hanwha Philly Shipyard, companies under a related corporate structure, will construct the ship under a joint-build model, following a contract placed by another group firm, Hanwha Shipping, with an option for one additional vessel.
It’s a complicated situation that aims to comply with tougher U.S. restrictions, part of the Trump administration’s revitalization of the domestic maritime sector.
“This initiative aims to meet the growing demand for U.S. LNG carriers crewed by U.S. mariners that comply with rigorous U.S. Coast Guard standards,” Hanwha Ocean said in a release. “These ships represent a resurgence in U.S. shipbuilding capabilities, buoyed by recent U.S. trade policies that require a growing percentage of LNG exports to be transported on U.S. vessels.”
The new rules proposed by the United States Trade Representative are aimed at blunting China’s dominance of shipping and shipbuilding. They require, among other things, that 1% of all U.S. LNG exports to be transported aboard a U.S. flagged and crewed vessel beginning in April 2028.
The Hanwha order would seem to fit that requirement, but the transaction was years in the making. After Daewoo Shipbuilding & Marine Engineering was acquired in 2023, Hanwha Shipping was formed in 2024. Hanwha Philly Shipyard was created several months later after the facility was acquired from Norwegian firm Aker.
Furthermore, the U.S. vessel requirements specifically require U.S.-built vessels beginning in April, 2029. It’s not clear whether the Hanwha ship will still qualify. And if it does, observers wonder how that will resonate through the global shipbuilding industry.
“If Hanwha leverages their shipyard in Korea while meeting the USTR’s LNG export “U.S.-built” vessel requirement, then what happens when a U.S.-owned company places a similar order for a new jointly-constructed vessel with an allied yard?” said James Ligthbourn, founder of U.S. financier Cavalier Shipping. “Could that theoretical vessel be Jones Act eligible? And could it be delivered at a competitive international cost?”
Published reports have estimated the price of the Hanwha order at $250 million, roughly in line with the cost of a ship built in Korea. Lightbourn noted that vessels built in the U.S. can run about five times more than that of vessels built in Asia.
“There are billions of dollars of Jones Act fleet value at stake, depending on what it really means for a vessel to be “U.S.-built,” he said. “Hanwha’s latest LNG carrier could be the vessel that clarifies that definition.”
Hanwha Ocean said it became the world’s first shipbuilder to produce and deliver its 200th LNG carrier earlier this year.
Find more articles by Stuart Chirls here.
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