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Korean shipbuilder close to landing US$4Bn in LNG newbuilds in Mozambique and Russia

With global shipbuilding at an historic low for the first half of 2020, Samsung Heavy Industries (SHI) has suffered alongside South Korea’s big three shipbuilders. SHI’s fortunes could change for the better quickly in the second half, if it closes on deals to build LNG carriers worth US$4Bn for LNG projects in Mozambique and Russia.

SHI’s fortunes could change for the better quickly in the second half, if it closes on deals to build LNG carriers worth US$4Bn for LNG projects in Mozambique and Russia. Business Korea reports SHI is expected to sign a contract with French energy company Total to construct eight LNG carriers. Those LNG carriers would be for Area 1 of the Mozambique LNG project. Total is expected to need up to 16 LNG carriers for the project, with a projected start date of 2024. SHI also stands a strong chance of winning orders to build 10 ice-breaking LNG carriers for the Arctic LNG 2 project, reports Business Korea. Those Arc7 class LNG carriers have been ordered for Novatek from Russia’s Zvezda Shipyard. However, BRL Shipping Consultants said in its BRL Newbuilding Contracts Weekly Report that a 14-vessel order had been placed with Zvezda Shipyard by Smart LNG, a joint venture between Sovcomflot and Novatek, with financial backing from VEB.RF. Expectations were that SHI, a technology partner with Zvezda Shipyard, would receive a subcontract for hull building blocks for assembly and completion at the Russian shipyard. Yet to be confirmed are LNG carrier orders to support Qatar’s North Field East expansion and Golden Pass LNG projects. SHI has inked a shipbuilding slot reservation agreement with Qatar Petroleum, with the possibility of building as many as 40 LNG carriers over several years. In its most recent investor presentation, SHI reported securing new shipbuilding orders to construct three shuttle tankers, two very large crude carriers and two very large ethane carriers worth US$700M during the first eight months of 2020. Overall, SHI’s backlog as of 31 August 2020 was 91 vessels worth US$19Bn, including 33 LNG carriers valued at US$6.7Bn. Among its offshore orders is a floating LNG vessel for Eni Coral valued at US$2.5Bn, set for delivery in June 2022. Global shipbuilding ground to a halt in H1 2020 due to the coronavirus pandemic. New ship orders totalling 5.8M compensated gross tonnes (CGT) were placed in H1 2020, down 58% year-on-year from H1 2019 when 13.8M CGT of ships were ordered.

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