Samsung Targets Seven-Fold Jump in Offshore Orders

Co. expects offshore-equipment orders to jump almost seven-fold this year as a global economic recovery offsets concerns of project delays in the Gulf of Mexico following an oil spill. The world’s largest maker of drill ships may exceed its $4 billion order target for offshore platforms and production structures this year, having already reached more than half that tally, said Harris Lee, its vice president of marketing. Last year, the Seoul-based company won $600 million of orders.
“We are bidding on a considerable number of projects,” Lee said in an interview yesterday in Geoje, South Korea. “We are getting a lot of inquiries from potential clients.”
The company is set to announce a second floating liquefied natural gas platform contract this year, following a Royal Dutch Shell Plc order, Lee said, without naming the customer, as energy companies ramp up exploration off Australia and Brazil to replace depleting reserves. Gulf of Mexico projects face delays after regulators halted new drilling following the April 20 oil rig explosion.
“The offshore business is the one bright spot for shipyards at the moment,” said Lee Sokje, an analyst at Mirae Asset Securities Co. in Seoul. “Still, the Gulf of Mexico spill could dampen the offshore business at a time when things are looking good.”
Gulf of Mexico
The oil-rig explosion killed 11 workers and spewed millions of gallons of oil into the Gulf. The rig was owned by Transocean Ltd. and operated by BP Plc. BP subsequently postponed some meetings with Samsung Heavy, Lee said.
BP, ConocoPhillips, Petroleo Brasileiro SA, Cobalt International Energy Inc. and Plains Exploration & Production Co. are among oil explorers with projects now on hold in the Gulf of Mexico or coastal California after the drilling halt.
Samsung Heavy plans to deliver nine drill ships this year, Lee said. Stronger demand for deep-water drilling ships, combined with a rising Korean won and higher steel costs, should push up the $550 million price tag for such ships, Lee said.
Samsung Heavy fell 1.3 percent to close at 22,650 won in Seoul trading. The benchmark Kospi index gained 0.1 percent.
The shipyard’s two floating LNG plant orders this year are worth a combined $2.5 billion, Lee said. The company, the world’s second-largest shipbuilder, may also sign a deal early next year for a similar facility for the Sunrise project in the Timor Sea, Lee said.
Sunrise
Woodside Petroleum Ltd., Australia’s second-largest oil and gas producer, and Shell are among companies backing the Sunrise project. The plant would be the second to be built by Samsung Heavy under a 15-year contract with Shell, Lee said.
The project still needs approval from the government of East Timor, which has said it opposes plans to process gas offshore instead of on land.
In Brazil, Samsung Heavy is considering raising its 10 percent stake in Estaleiro Atlantico Sul at the Ipojuca-based company’s request, Lee said. Samsung Heavy bought part of the shipyard in 2008 to help it win contracts from state-controlled Petrobras, which plans to invest $174.4 billion through 2013 to tap offshore fields and order 58 drilling rigs, mainly from domestic yards, through 2018. Hyundai Heavy Industries Co. said in March that it agreed to purchase a 10 percent stake in EBX Brasil SA’s shipyard.