KOGAS Plans LNG Carrier Tender to Test Domestic Tank Design

State-run Korea Gas Corp. moved Sept. 10, 2026 to prepare a domestic tender for one 174,000-cubic-meter liquefied natural gas carrier to validate indigenous cargo containment tank technology.

The planned vessel will deploy the second-generation KC-2 membrane containment system on international shipping routes, seeking to break a commercial monopoly held by French engineering firm Gaztransport & Technigaz.

South Korean shipbuilders pay GTT roughly 20 billion won ($15 million) in licensing royalties for every large LNG carrier they build, representing about 5% of the standard 370 billion won ($276 million) vessel price.

Domestic shipyards have constructed 579 membrane LNG carriers over the past 30 years, paying GTT an estimated cumulative total of 7.3 trillion won ($5.5 billion) in containment patent fees.

GTT generates approximately 90% of its global cargo containment licensing revenue from South Korean shipyards, creating an exposure where domestic shipbuilders shoulder heavy intellectual property overhead despite dominating vessel construction.

South Korea's primary shipyards — HD Korea Shipbuilding & Offshore Engineering, Samsung Heavy Industries and Hanwha Ocean — hold more than 70% of global orders for high-capacity gas carriers.

Those three shipyards surrender about five percentage points of operating margin on each gas carrier to pay for foreign membrane tank licenses.

Korea Gas Corp. plans to offer evaluation incentives to participating shipbuilders, using its domestic chartering power to absorb operational risks, industry officials said.

The ministry and Korea Gas Corp. did not issue an official procurement notice on Sept. 10, leaving the exact bidding timetable and risk-sharing ratios unconfirmed.

The tender follows a policy framework established on Dec. 22, 2025, when the Ministry of Trade, Industry and Energy launched a joint public-private working group to advance domestic containment commercialization.

That working group brought together officials from the Ministry of Economy and Finance, the Ministry of Oceans and Fisheries, Korea Gas Corp., HD Hyundai Heavy Industries and Samsung Heavy Industries.

Government planners designated indigenous LNG containment technology as one of 15 flagship economic projects, establishing a combined support program covering research funding, testing infrastructure and targeted corporate tax credits.

Agencies must accelerate real-sea demonstrations of core shipbuilding technologies, Trade Minister Kim Jung-kwan said during a review of public energy enterprises on Jan. 8, 2026.

A membrane cargo tank — an insulated barrier system maintaining liquefied gas at minus 163 degrees Celsius — prevents cryogenic liquid from touching the inner hull and causing structural steel to crack.

The KC-2 design reconfigures the primary metallic barrier and insulation composite to address insulation defects that crippled South Korea's first-generation system, known as KC-1, nearly a decade ago.

Korea Gas Corp. and the three major shipyards formed a dedicated joint venture named KC LNG Tech in February 2016 to license the original KC-1 system across global commercial shipping.

Troubles emerged after Samsung Heavy Industries delivered two 174,000-cubic-meter KC-1 carriers, the SK Serenity and SK Spica, to domestic operator SK Shipping between February and March 2018.

Both vessels suffered severe cold spots — surface freezing on the outer hull caused by defective thermal insulation — forcing the ships to halt commercial service within five months of their delivery.

The grounded vessels spent years anchored off Malaysia while the shipyard, the state gas utility and the vessel operator engaged in multi-year litigation across domestic courts and international arbitration panels.

A London arbitration tribunal ordered Samsung Heavy Industries in December 2023 to pay $290 million to SK Shipping for vessel value depreciation resulting from delayed defect repairs.

The Seoul Central District Court ruled on Jan. 16, 2026 that Korea Gas Corp. bore primary liability for KC-1 design flaws, ordering the state company to reimburse Samsung Heavy Industries 299.6 billion won.

The Seoul High Court concluded closing arguments on Sept. 4, 2026 in the appellate damages case involving Korea Gas Corp., Samsung Heavy Industries and SK Shipping, scheduling its verdict for Nov. 11, 2026.

Shipbuilders developed KC-2 variants to correct those structural failures, completing trial operations on small commercial vessels including an HD Hyundai LNG bunkering ship and Samsung Heavy testing barges without cold-spot recurrences.

Private shipowners have nonetheless refused to specify KC-2 on standard deep-sea export carriers without long-term open-ocean operating data, leaving state gas import tenders as the sole path to commercial adoption.

South Korean shipbuilders retain forward delivery slots booked through late 2028, providing sufficient revenue stability to absorb prototype construction without straining existing yard commitments.

The Ministry of Trade, Industry and Energy targeted completion of sea-trial validation on the newly ordered vessel by 2028, aiming to secure commercial export contracts by 2030.

Korea Gas Corp. plans to conclude bidding procedures for the single 174,000-cubic-meter demonstration vessel before Dec. 31, 2026.