Hyundai Heavy Wins Record $2.06 Billion Gorgon Order

Hyundai Heavy Industries Co. announced a $2.06 billion order to build processing facilities for Chevron Corp.’s Gorgon liquefied-natural-gas project in Australia, its largest single contract win. The company will build 48 fabricating modules on Australia’s Barrow Island to start producing LNG from 2014, it said today in a regulatory filing. Installation is scheduled to be completed by 2013.
Hyundai Heavy, the world’s largest shipyard, is expanding into LNG facilities as energy companies boost exploration on a 76 percent climb in oil prices this year, depleting reserves and growing demand for alternative fuels. The A$43 billion ($40 billion) Gorgon venture between Chevron, Exxon Mobil Corp. and Royal Dutch Schell Plc is the largest of at least a dozen planned LNG projects in Australia.
“Oil companies will continue to spend money as long as there’s demand for fuel,” said Cho In Karp, an analyst at Shinhan Investment Corp. in Seoul. “The need for more offshore structures will continue for a long time.”
The shipyard fell 0.3 percent to 190,500 won in Seoul trading today. The stock has dropped 4.5 percent this year, compared with a 47 percent advance by the Kospi index.
Gorgon Project
The Barrow Island modules will process gas piped in from wells in 11 fields 130 to 200 kilometers (81 to 124 miles) off the coast. Carbon dioxide emitted during the liquefaction process will be captured and injected into porous rock 2.5 kilometers underground in the world’s biggest carbon-storage project, at a cost of A$2 billion, Chevron has said.
The Gorgon project is initially scheduled to have an output of 15 million metric tons of gas a year. The partners will consider increasing capacity within the next year, George Kirkland, Chevron’s executive vice president for exploration and production, said last month.
“As there are a lot of investments being made to explore for fuel, we hope to win more of these projects,” Hyundai Heavy said in a separate e-mailed statement. The shipyard is bidding to provide LNG facilities for a project 51 percent owned by Daewoo International Corp. in Myanmar.
Hyundai Heavy, Samsung Heavy Industries Co. and other shipyards are vying for orders to build floating LNG production and storage vessels as well as drill ships to offset a slump in demand for bulk carriers and container vessels.
Global ship orders dropped 86 percent in the first eight months from a year earlier to 16.9 million deadweight tons, according to London-based Clarkson Plc, the world’s largest shipbroker.
Only five container vessels were ordered in the period, compared with 179 ships a year earlier, according to Clarkson figures. Shipping lines have pared expansion plans on a slump in global trade and a lack of financing brought on by the credit crunch last year.
Hyundai Heavy received $623 million worth of shipbuilding and offshore orders in the first eight months, 96 percent lower than a year earlier, according to the company.