Zicom Group nets $60 million LNG propulsion order

Zicom Group ASX ZGL LNG Propulsion Systems oil tanker marine sector
Zicom expects strong demand for its marine systems due to new shipping rules that see vessels replacing diesel engines with gas.

Singapore-based specialist equipment manufacturer Zicom Group (ASX: ZGL) has announced it has secured S$60 million (A$59.2 million) worth of orders to design and supply liquefied natural gas (LNG) propulsion systems for oil tankers.

The systems will be for several vessels being built for an undisclosed “leading” European oil tanker owner with delivery of the orders scheduled for 2022-2023.

In an announcement to the market, Zicom chief executive officer Sim Kok Yew said the order underscores the gathering momentum in the transformation of the company’s marine sector.

After Zicom’s deck machinery products hit a downturn five years ago, the company decided to leverage its network and industry knowledge to embark on developing technology for green energy propulsion systems for ocean-going vessels.

“This direction enables the group to expand its footprint to cover the entire shipping industry and not just narrowly focus on offshore marine applications,” Mr Sim said.

Vessels to reduce sulphur emissions

Mr Sim said the growth prospects for Zicom’s technology is expected to be “strong” due to recently introduced international shipping rules that require all ocean-going vessels to greatly reduce sulphur emissions from their engines.

This has made it mandatory for existing vessels to install scrubber filtration systems or to use high-grade low sulphur fuel in place of diesel in order to comply; however, each of these options have limitations.

“New vessels would install gas engines instead of diesel engines and use LNG propulsion to power the engines,” Mr Sim said.

Offshore marine sector demand

According to Zicom, demand in the offshore marine sector has begun to show “some positive signs”.

“Immediate short-term resurgence in demand for our deck machinery is not apparent, [although] prospects in gas processing projects continue to remain strong,” the company stated.

Mr Sim also said he hopes global travel and interactions can return to normalcy following the planned roll-out of COVID-19 vaccines, a prospect which would “further enhance and strengthen Zicom’s growth prospects in the industry”.

Servicing the Asia Pacific

Zicom is headquartered in Singapore and also has a direct presence in Australia, Thailand, China and Indonesia.

In addition to offshore marine and oil and gas equipment, the company manufactures equipment for the construction (concrete mixers), industrial (hydraulic systems) and precision engineering and automation industries (for example, automated production lines, electronic and bio-medical equipment).

Zicom also took advantage of the COVID-19 lockdown period last year to develop a surgical mask production line in-house to address ongoing global shortages of personal protective equipment.

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