SHI Wins Orders for 3 FLNG Units Worth 6 Trillion Won in Two Days

Samsung Heavy Industries (SHI) has released good news about overseas contracts. It has succeeded in winning large orders for two consecutive days, the total amount of contracts received has now surpassed 6 trillion won (US$5.35 billion). Also, South Korea's second-largest shipbuilder has snared five-sixths of the total amount of overseas orders for Floating LNG (FLNG) vessels, proving to be the most attractive shipbuilder in the sector.

SHI announced on July 1 that it has won three orders for FLNG vessels from Royal Dutch Shell at 5.27 trillion won (US$4.7 billion). The price of each ship exceeds 1.4 trillion won (US$1.25 billion).

FLNG facilities, which are called “floating LNG plants,” are offshore plants that are designed to extract and refine natural gas from undersea gas fields and processes and store it into LNG. It is the world’s largest maritime vessel, longer than four or five soccer fields. This year to date, a total of six FLNG vessels have been ordered in the global market, and SHI won contracts to build five of them, almost monopolizing the market.

Three FLNG ships for which SHI just received orders will operate in offshore Browse gas fields, around 425 kilometers northeast of Broome, Australia. The gas fields are large mining lots which thought to contain 15.4 trillion cubic feet of natural gas and 450 million barrels of condensate.

The size of the FLNG vessels will be the same as SHI’s Prelude FLNG, a vessel measuring 488 meters long, 74 meters wide, and weighing 600,000 tons when fully loaded, which displaces the same amount of water as six aircraft carriers. Each ship can produce 4 million tons of LNG annually.

The amount of the contract worth 5.27 trillion won (US$4.7 billion) is only for the hull construction of three FLNGs alone. A contract for the topsides and equipment for the vessels will be signed in the second half of 2016, according to the basic front-end engineering design (FEED).

Also, the contracts are conditional with issuance of the Notice to Proceed (NTP) from a client. After the basic design is completed, construction starts only when a client gives notice to a contractor to proceed.

Previously, SHI signed a 1.18 trillion won (US$1.05 billion) deal to build two offshore platforms from Norway-based Statoil ASA on June 30. It is the first company that wins orders for offshore facilities this year among the nation’s three shipbuilders. Meanwhile, SHI has posted nearly US$8.7 billion (9.75 trillion won) in sales to date. The figure is more than half of US$15 billion (16.81 trillion won) of its sales target this year.