Korean shipyards eye more LNG ship orders after Qatar megadeal

South Korea

South Korea’s three major shipyards are on course to win more overseas orders for liquefied natural gas (LNG) carriers following a massive deal from Qatar, industry sources said Wednesday.

The shipbuilders — Hyundai Heavy Industries Co., Samsung Heavy Industries Co. and Daewoo Shipbuilding & Marine Engineering Co. (DSME) — signed a combined US$19.2 billion deal on Monday with Qatar Petroleum to reserve their LNG ship construction capacity for Qatar Petroleum through 2027.

The preliminary pact, an arrangement that precedes a major shipbuilding order, allows the Qatari company to secure so-called construction slots from the South Korean shipyards. The deal is expected to lead to the securing of more than 100 LNG carriers in the near future.

With a megadeal from the Middle Eastern country in the bag, the three shipbuilding behemoths are now setting their sights on future orders from Russia and Mozambique.

Russia’s state-run gas producer Novatek has been carrying out the so-called Arctic LNG-2 project under which it will place orders for an additional 10 icebreaking LNG carriers on top of its original 15 vessels.

Expectations are growing that Samsung Heavy Industries and DSME may bag orders from Russia’s top gas company. Samsung Heavy Industries clinched a new order to build five icebreaking LNG ships from Novatek last year.

Samsung Heavy Industries is reportedly pinning high hopes on the remaining 10 orders under Novatek’s original plan as it has joined forces with Russian shipbuilder Zvezda for the LNG project.

DSME and China’s Hudong-Zhonghua Shipbuilding Co. are widely expected to win orders for the additional 10 LNG carriers — five ships each.

In 2014, DSME obtained a mammoth deal to build 15 icebreaking LNG vessels for the development of a gas field on the Yamal Peninsula in western Siberia.

“Novatek is likely to place orders for the 10 LNG carriers during the third quarter of the year,” an industry insider said. “DSME is better positioned, given its past experience.”

Watchers also said Mozambique is highly likely to place orders to build 16 LNG vessels for its LNG project late this year or in early 2021.

The forecast comes as the Export-Import Bank of the United States has recently raised its support for the project, led by French oil and gas titan Total S.A., to $6.5 billion.

Industry observers expect Hyundai Heavy Industries and Samsung Heavy Industries to clinch orders to build eight LNG carriers each.

The megadeal from Qatar and hopes for more orders come amid a bleak outlook for local shipbuilders in the second half of the year due to the coronavirus pandemic and low oil prices.

Some analysts claim it is still too early to say that the shipbuilding industry is enjoying a turnaround from sluggish business last year due to a Sino-U.S. trade war and other negative factors.

Source: Yonhap

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