Brazil Presses Korean Shipbuilders for Tech Transfers

Brazil is pressing cash-strapped Korean shipbuilders to hand over their core technologies in return for orders. And with work hard to come by, they are willing to oblige. The world's third-biggest shipbuilder Samsung Heavy Industries has sent a letter of intent (LOI) to Brazilian investors to that effect.
"We are better positioned to win more such orders from Brazil," the company spokesman said. Its Vice Chairman Kim Jing-wan recently said he hoped to hear "good news" from Brazil.
Samsung has a contract for two drill ships for Petrobras that it signed at the end of 2008. It also sold designs for aframax- and suezmax-vessels to Petrobas-related shipyard Atlantico Sul.
This was the part of the Brazilian state energy group's multi-billion dollar offshore-related project.
Billions of dollars will be invested in oil and gas exploration in the Campos Basin ― northeast of Rio de Janeiro in the Atlantic Ocean. Petrobras said up to 57 ships and offshore platforms will be needed.
According to high-ranking executives from Hyundai Heavy Industries (HHI) and Daewoo Shipbuilding & Marine Engineering (DSME), the company is demanding Korean shipyards transfer key technologies in shipbuilding and offshore plants in return for fresh orders.
"Technology transfer will become the top priority for Petrobras," an executive from HHI said, asking not to be identified.
This demand puts the Korean shipbuilders between a rock and hard place.
On one hand they want orders, while on the other they are anxious to prevent the transfer of core technologies. In the end, they are choosing the first in order to weather the ongoing drought of orders triggered by the global financial crisis.
"Japanese shipbuilders don't produce offshore platforms and Chinese shipyards lag behind those from Korean shipbuilders in terms of such technology," according to the executive.
Other industry sources said Petrobras is pushing hard for "transfer efforts" from Korean shipyards.
The global ship market was at a virtual standstill during the first quarter of the year with orders totaling a mere 26 ― most of them small vessels.
The number is less than one tenth of that placed during the same period of last year, according to the China Ship Marketing Research Center (CSMRC).
"That's why Korean shipyards are desperate to win more offshore oilrig and drill ship orders from Petrobras because that may help offset the sharp drop in new orders that began last year," said an executive from DSME.
Exploring the offshore sector to develop high-end deepwater products such as drilling rigs is regarded as a promising area for the time being, analysts say.