SEOUL : South Korean shipbuilder Samsung Heavy Industries received the single largest order in the history of the company which analysts believed is tied to QatarEnergy’s expansion of its LNG operations. In two stock exchange filings made Samsung reported orders totaling $3 billion for 14 LNG carriers to be delivered in 2024 and 2026. The buyers were not identified in the filings.
The larger of the two orders was simply identified as being with a Bermuda-based company and it covers a total of 12 LNG carriers each with a capacity of 174,000 cbm. The contract, which is due to be completed in July 2026, was valued at $2.57 billion, or a cost of approximately $208 million per vessel.
A second order was also reported for two LNG carriers. This was identified as being for an African company operating in Africa. Those vessels are due for delivery at the end of 2024 and are valued at a higher price of $212 million each.
Samsung had previously set a record with an order for 20 containerships received in March 2021. That contract was valued at $2.2 billion. While it was the previous largest single order for the company, it also highlights the lower value of containerships and higher profits the yards are making on LNG carriers.
It is widely believed that the LNG carrier orders are linked to QatarEnergy, which two years ago reserved a significant portion of the LNG shipbuilding capacity at Samsung as well as competitors Hyundai Heavy Industries and Daewoo Shipbuilding & Marine Engineering. Qatar is expected to build 100 or more LNG carriers by 2027 as part of its North Field Expansion Project which calls for a nearly two-thirds increase in LNG output to a total of 126 million tons.
The LNG carrier orders are considered especially significant for the South Korean shipbuilders who have reported declining profit margins and financial losses due to competition from Chinese shipbuilders and rising material and labor costs. The Korean yards have been aggressively expanding their LNG orderbook with analysts reporting orders totaling more than $10 billion for 48 carriers in 2022. Clarkson Research highlighted that the contract price per ship has reached the highest it has recorded at over $222 million per ship, although the current contracts are coming in at a lower level per ship.
The orders to Samsung follow a similar order at the beginning of June for four LNG carriers to be built at DSME’s Okpo Shipyard also placed at the cost of $212 million per ship. That order was confirmed as the first for the South Korean yards from Qatar. Hyundai also received an order for two LNG carriers with all of these contracts believed to be the leading edge of the Qatar expansion program. In addition, Qatar working with Japan’s Mitsui O.S.K. Lines also ordered four LNG carriers from Chinese shipbuilders.
The latest South Korean orders continue the strong momentum reported by the country’s leading shipbuilders with new orders in 2022. Samsung reported with these latest orders it has won orders totaling $6.3 billion for 33 ships so far in 2022. Company executives pointed out that they expect to “easily achieve” the orderbook targets in large part due to the strength of orders for LNG carriers.