- SHI and Hanwha Ocean may miss annual targets with delays in the Qatar LNG project.
- Negotiations for 20 vessels are challenging after HD Hyundai Heavy Industries secured 17.
- SHI leads globally in order backlogs; Hanwha Ocean excels in defence contracts. Prolonged negotiations pose obstacles to meeting annual targets.
Samsung Heavy Industries (SHI) and Hanwha Ocean face potential order target misses, with delays in securing the Qatar LNG carrier project. Despite SHI’s global lead in order backlogs and Hanwha Ocean’s strength in defence contracts, negotiations for the remaining 20 vessels pose challenges to meeting annual targets.
Challenges in Securing LNG Carrier Project Orders
Samsung Heavy Industries (SHI) and Hanwha Ocean, key players in the Korean shipbuilding sector alongside HD Korea Shipbuilding & Offshore Engineering (KSOE), are anticipated to fall short of their annual order targets by the end of December. Industry insiders reveal that despite being in the final stages of negotiations for the second LNG carrier project with Qatar Energy, both SHI and Hanwha Ocean may not secure orders before the close of 2023.
Ongoing Negotiations and Potential Setback
While HD HHI signed a memorandum of understanding for 17 vessels in October, SHI, Hanwha Ocean, and Chinese shipbuilders are reportedly in the last phases of price negotiations for the remaining 20 vessels. Observers suggest that even if additional orders are secured in the remaining week, it is unlikely that the two Korean shipbuilders will meet their annual targets set at the beginning of the year, given the expected distribution of orders over time.
Annual Targets and Industry Standing
At the start of the year, SHI and Hanwha Ocean aimed for annual order targets of US$9.5 billion and US$6.98 billion, respectively. As of the end of November, they had achieved 69 per cent and 43 per cent of their goals with US$6.6 billion and US$3 billion, respectively. Despite potential setbacks, SHI retained its position as the top shipyard globally, leading in order backlogs with 10.7 million CGT, according to Clarkson Research. Hanwha Ocean’s Okpo Shipyard also maintained a strong standing with 8 million CGT, driven by increased orders in the defence sector, notably the contract with the Korean Defense Acquisition Program Administration for the Jangbogo Submarine. However, challenges in finalizing the Qatar project have led to prolonged negotiations, with shipbuilders aiming to maximize efficiency without compromising on pricing.
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Source: Business Korea
