DSME Cancels An Ice-breaking LNG Carrier Order
Daewoo Shipbuilding & Marine Engineering (DSME) announced on May 23 that it canceled a shipbuilding contract with a Russian shipowner on May 18.
The contract is one of the three ice-breaking LNG carrier contracts they concluded in October 2020, which total 1.0137 trillion won. The first vessel was supposed to be delivered in April 2023, but the shipowner failed to make the second payment. The price of the ship in question is 330 billion won or so, and the other two contracts are likely to be canceled, too.
This has to do with international financial sanctions on Russia. The country was excluded from SWIFT after it invaded Ukraine, and Russian shipowners are currently incapable of making payments to South Korean shipbuilders.
DSME built 46 percent of the ship in question until the end of March. The company has to find another client while continuing to build the ships. The problem is that the ice-breaking LNG carriers with floating storage units are more expensive than general LNG carriers, the new client will not be easy to find, and the ships are likely to exacerbate the inventory status of the company.
At present, the three major South Korean shipbuilders’ contracts with Russia are estimated at US$8 billion. Specifically, the estimate is US$5 billion for Samsung Heavy Industries, US$2.5 billion for DSME, and US$550 million for Korea Shipbuilding & Offshore Engineering.