S. Korea: Big 3 In 14 Trln Won Talks for Qatar LNG Vessels

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HD Hyundai Heavy Industries, Hanwha Ocean, and Samsung Heavy Industries, collectively known as the Big 3 of South Korean shipbuilding, are set to begin substantive negotiations this month for an order of LNG vessels from QatarEnergy worth 14 trillion won (US$10.7 billion).

According to industry sources and foreign media on June 2, QatarEnergy is planning to commence negotiations this month with the Big 3 for LNG vessel procurement. In the first phase of the project in 2020, QatarEnergy ordered 54 vessels from the Big 3 (17 from HD Hyundai Heavy Industries, 19 from Hanwha Ocean, and 18 from Samsung Heavy Industries).

HD Hyundai Heavy Industries and Samsung Heavy Industries have set their order negotiation deadline within this month, while Hanwha Ocean has set theirs by September. Notably, the second order quantity has decreased slightly from the first to around 40 vessels (10 from HD Hyundai Heavy Industries, 12 from Hanwha Ocean, and 16 from Samsung Heavy Industries). However, the profitability is expected to increase due to the rising price of LNG vessels. In the first contract last year, each LNG vessel cost US$215 million, but this year, each is likely to cost over US$230 million.

Industry sources predict that if QatarEnergy orders 170,000 m³ LNG vessels, the price per ship would reach around US$260 million. The second order quantity from QatarEnergy is expected to be close to US$10 billion.

QatarEnergy plans to finalize contracts with the shipowners that will operate the vessels by the end of the year.

HD Hyundai Heavy Industries has preliminarily achieved 72.6% of its annual order goal of US$15.74 billion by winning orders for 93 vessels amounting to US$11.42 billion this year. Meanwhile, Samsung Heavy Industries and Hanwha Ocean (formerly Daewoo Shipbuilding & Marine Engineering) have displayed relatively slower progress in achieving their annual targets. Samsung Heavy Industries has so far secured orders for seven vessels, amounting to US$2.7 billion, representing 28% of their annual order goal of US$9.5 billion. Hanwha Ocean has obtained orders for 5 vessels, totaling US$1.06 billion, achieving about 15.2% of its target of US$6.98 billion.

Source: Business Korea

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