Local Hard Times
Since last April, there were no new offshore plant orders for Korea’s big 3 shipbuilders. Due to shale gas effects, oil majors do not feel the need for crude oil exploration, and this shrank the investment in offshore plants.
If this situation lasts, shipbuilding companies will not be able to accomplish their target sales for this year.
A souce in the shipbuilding industry admitted that new offshore plant orders dropped compared to last year. He explained that oil majors are deferring their investments in offshore plants, as they are not sure to turn their business directions to shale gas or new crude well explorations.
According to the report of the Korea Offshore and Shipbuilding Association and Clarksons on June 22, the worldwide offshore plant industry from January to April this year was worth US$15.5 billion, US$1 billion less than last year. Domestic offshore plant orders also decreased to US$3.9 billion from last year’s US$5 billion.
Hyundai Heavy Industries has not received any new orders since last February’s Floating Production Offloading (FPO). Their offshore plant division received US$5.3 billion worth of orders during January-May last year, but only US$1 billion this year. Their target sales is US$6.9 billion, which looks extremely difficult to achieve under the current circumstances.
Daewoo Shipbuilding & Marine Engineering faces an even harder situation. They do not have a single offshore plant order as of this May. Last year, they received US$3.5 billion worth of orders, including 2 fixed platform and 1 modular plant, until May. However, they haven’t even had one order yet this year. Especially, offshore plants account for more than 60 percent (US$8.9 billion) of the entire sales volume of Daewoo Shipbuilding & Marine Engineering, and therefore, other businesses including new shipbuilding are more difficult.
Samsung Heavy Industries received orders for 2 drill ships last April and 1 FLNG, a total worth of US$2.9 billion, by last May. Their total target sales this year are US$15 billion, and their offshore plant target is US$9 billion, which is a very tough situation as well.
A source in the industry said that even if there is no new offshore plant currently, they still need to wait and see, as a single order for offshore plants is still very lucrative.