Another Chance
As global oil majors are showing their will for the offshore plant business, South Korean shipbuilders are becoming busy. A lot of attention is being paid to whether or not Korean firms suffering from a new order cliff will find a way out of darkness by receiving new orders to build offshore plants.
According to the offshore plant industry on September 18, BP of the UK will select a preferred bidder for its “Mad Dog 2” Project amounting to about US$ 1 billion by the end of this month. It is said that BP recently scratched off Chinese firms on its list and is in the final negotiations with Big Three Korean companies.
The Mad Dog 2 Project is to build a semi-submersible crude oil production facility in the Gulf of Mexico. The project was pushed forward with on the premise that the oil price will stood at US$ 100 but last year, the plan was suspended all at once. This year, BP dialed down the size of the project to US$ 1 billion from US$ 2 billion and negotiated not only with Korea’s Big Three but with Chinese and Singaporean companies under the table. But the progress was at a snail’s pace. But recently, BP put aside Chinese firms from this project and is in negotiation with Korean firms only. It is known that BP demanded a 10% cut in cost from Korean firms instead.
A Samsung Heavy Industries-led consortium is negotiating over the development of a coral gas field in Mozambique. The negotiation is gaining speed too. ENI, a government-run energy company of Italy will place an order for this floating liquefied natural gas (FLNG) project worth about US$ 5.4 billion. Samsung Heavy Industries will build about the half of the facility.
The Samsung Heavy Industries-led consortium involves France’s Technip and Japan’s JGC. The facility will be installed in Sector 4 to be developed by ENI in the sea east of Mozambique. Industry watchers say that the order will be finalized as early as this month. If and when Samsung Heavy Industries lands the order, the order will give Samsung Heavy Industries new momentum since the company has not received any order this year. This is because the new order will empower Samsung Heavy Industries to achieve the half of US$5.3 billion which is the company goal for this year at a stroke.
The Vito Project is also showing a sign of beginning again in two years. The project belongs to Royal Dutch Shell, a joint venture between the UK and the Netherlands and aims to build a submersible platform in the Gulf of Mexico. Shell was planning to place an order for the Vito Project in the first half of this year after giving an order to build a submersible production facility to Samsung Heavy Industries last year. But low oil prices put the order on hold. But recently, Shell resumed the project and began to select a shipbuilder for the project. To this end, Shell is coordinating negotiation schedules with Korea’s Big Three and sounding companies of China, the US, Singapore and Malaysia about taking tours of their dockyards.
Statoil, a Norwegian crude oil developer, is drawing attention as the company may initiate large-scale offshore plant projects. It is known that Statoil is ready to aggressively go ahead with a marine project after completing restructuring such as cost cutting to ride out low oil prices. Experts analyzed that the company lowered the break-even point of the North Sea Oil Field Development Project to US$ 40 per barrel. Accordingly, industry watchers predict that Statoil will implement 30 offshore projects amounting to over US$ 30 billion one after another.
Some experts say that as most oil majors restructured themselves to set US$ 50 as their break-even points, low prices will be a big variable in building offshore plants no longer.
But others say that an offshore plant nightmare is not gone yet as Korean shipbuilders still have offshore plants to deliver and are undergoing trials and errors in their work. Under these circumstances, Korea’s Big Three shipbuilders forecast that except for some projects, they will be able to deliver most of offshore plants now under construction to their customers within the end of next year.