fbpx
Tuesday, July 14th, 2020
Home » Shipping » South Korea awarded Qatar Petroleum’s record $19 billion LNG vessel order

South Korea awarded Qatar Petroleum’s record $19 billion LNG vessel order

FILE PHOTO - Giant cranes of Hyundai Heavy Industries are seen in Ulsan, South Korea, May 29, 2018. Picture taken on May 29, 2018. REUTERS/Kim Hong-Ji

REUTERS, JUNE 2, 2020

“This is the largest single LNG vessel order in history. We have never seen so many LNG vessels ordered in the same year, let alone by a single buyer,”

SEOUL – South Korea’s ailing shipbuilders have been thrown a lifeline in an increasingly tough market with a $19 billion order from Qatar Petroleum (QP) for liquefied natural gas (LNG) ships, analysts said on Tuesday.

Qatar’s state-run LNG producer signed agreements with South Korea’s “Big 3” shipyards on Monday to secure more than 100 ships through 2027, in the largest-ever single LNG vessel order.

With a steep market downturn on the horizon, the orders had come at the right time for Daewoo Shipbuilding & Marine Engineering Co Ltd (042660.KS), Hyundai Heavy Industries Holdings Co Ltd (267250.KS) and Samsung Heavy Industries Co Ltd (010140.KS), analysts said.

“They would have been worrying about their own survival next year if they didn’t win this Qatar deal,” said Lee Dong-heon, an analyst at Daishin Securities, who estimated the trio would now have an order backlog stretching a year-and-a-half.

Shares in the three shipbuilders rallied over 20% on Tuesday.

“This is the largest single LNG vessel order in history. We have never seen so many LNG vessels ordered in the same year, let alone by a single buyer,” said Saul Kavonic, analyst from Credit Suisse.

The industry has been suffering from a prolonged shipbuilding slump that has led to massive losses, job cuts and a bailout from the government. Lee said market forecasts had indicated a 30% fall in orders this year from a year ago.

Park Moon-hyun, an analyst at Hana Financial Investment Corp, said the deal could be a “opportunity for South Korean shipbuilders to overcome setbacks they have faced … and focus on what they are good at.”

QP did not announce breakdown orders for each company.

Samsung Heavy said it expects to sign deals starting this year through 2024 and expected a positive impact on orders by shipping companies who are considering LNG vessels. Both Hyundai Heavy and Daewoo Shipbuilding declined to comment.

($1 = 3.7535 riyals)

Reporting by Heekyong Yang and Jane Chung in Seoul; Additional reporting by Hyunjoo Jin in Seoul and Jessica Jaganathan in Singapore; Editing by Christopher Cushing and Richard Pullin

Other articles you may find interesting

Copyright © 2020 PortandTerminal.com. All rights reserved. This material may not be published, broadcast, written or redistributed.

Check Also

Screen grab of two ships colliding

VIDEO: Dramatic collision between two vessels on Welland Canal

PortandTerminal.com, July 12, 2020 TORONTO, ONTARIO – An investigation is underway following a dramatic collision …

Orange uniform. Suitcase. Container cranes

Key Countries Agree to Help Bring Home Seafarers Stuck on Ships

BLOOMBERG, JULY 10, 2020 The governments of 12 countries issued a joint statement pledging their …