Samsung Heavy Industries signed contract with Royal Dutch Shell for LNG-FPSO

On March 9, Samsung Heavy Industries announced that it has won contracts for nine oil tankers from four European shippers and for one marine structure from a Southeast Asian client.

It also announced that it had signed a contract with Royal Dutch Shell for the supply of one unit of LNG-FPSO.
Despite the continued signs of the financial crisis, shippers are securing more oil tankers to respond to OPEC’s potential production increase, which has been anticipated since the oil price recently rose above USD 80. As it has also been contacted by other shippers, SHI assesses that the shipbuilding market is in a state of recovery. CEO Roh In-sik said, "In addition to the contracts for oil tanker supplies, the company has also recently signed a contract for building one unit of LNG-FPSO with CEO Tieri Philenco Thierry Pilenko of TECHNIP and CEO Mattias Bichsel of Royal Dutch Shell, the joint bidders, in Paris, France. This marks the full-fledged launch of a historic project that will be recorded as the world’s largest contract of its kind." SHI signed a long-term exclusive contract with Royal Dutch Shell for the supply of LNG-FPSO at the end of July 2009.
According to the contract, the Company will be the exclusive supplier to Royal Dutch Shell of LNG-FPSO for the next 15 years. The contract amount for the body of the recently ordered LNG-FPSO will be fixed in early April, while the upper structure equipped with LNG production and liquefaction functions will be confirmed at the end of the year. Shipbuilding will begin in 2012, and the ship will be delivered in 2016. As the unit price of all items, including the equipment required, will be decided first, and the total amount and the quantity of items will be calculated after completing the detailed design that reflects the marine environment, the contract will enable stable profitability by protecting against the impact of possible incidents or changes in the contracted items. The industry predicts that the value of the project will reach USD 4 billion or USD 5 billion per unit. The length, width, height and weight of LNG-FPSO are 468 m, 74 m, 100 m and 200,000 tons, respectively. Samsung Heavy Industries and TECHNIP, a French firm, will jointly design the ship, and Geoje Shipyard will exclusively build the ship. When delivered, the LNG-FPSO will produce LNG of 3.5 million tons per year at LNG fields in Australia, starting in 2016. Barclays Capital of the US has predicted that investments in the exploration and production of marine energy will reach USD 439 billion, a year-on- year increase of 11%, prompted by the growth in demand for marine energy development. Industry experts also predict that the oil price hikes will result in contracts for 30 units of marine facilities in 2010, including LNG-FPSO or drill ships, indicating an improvement in the expectations for additional contracts in the shipbuilding industry.
CEO Roh In-sik of Samsung Heavy Industries said, "The company has secured shipbuilding contracts amounting to USD 41 billion (190 units) over the next 35 months, which is a stable level. The contract amount is the highest in the global shipbuilding market. In year 2010, we will strengthen our market dominance in the drill ship, icebreakers and LNG-FPSO markets by producing the world’s best products. We will also focus on eco-friendly ships, wind power generation facilities and floating structures."