South Korean shipbuilders are expected to bag $6.1 billion in large orders, including one FLNG and 14 LNG carriers, in the coming months.
South Korea’s shipbuilding industry reported on December 18 that Samsung Heavy Industries is designing the production of a Floating Liquefied Nature Gas (FLNG) for the Coral Sul project in Mozambique. The FLNG is worth US$2.5 billion, and the order is expected to be finalized before the end of 2024. Samsung Heavy Industries will also use this to achieve its annual order target of US$9.7 billion.
It is said that Samsung Heavy Industries has won 5 of the world’s 7 FLNG orders so far.
Mozambique has launched three LNG projects since the discovery of a large gas field off the coast of Cabo Delgado province in 2010. Mozambique’s gas reserves are expected to generate $100 billion in revenue in the coming years, according to a report published earlier this year by consultancy Deloitte.
The first to be completed and put into operation was the Coral South project, which was won by a consortium formed by Samsung Heavy Industries with France’s Technip and Japan’s JGC in 2017. The first FLNG of the project has an annual capacity of 3.4 million tons, and in 2021, the President of Mozambique visited Samsung Heavy Industries’ Geoje Shipyard to attend the naming ceremony of the first FLNG from the Mozambique gas field, “Coral Sul FLNG 1”. In 2022, this FLNG was put into operation.
Samsung Heavy Industries is about to receive a new FLNG order for the Coral Sul FLNG 2, which is the follow-up project (Coral North) of the Coral Sul FLNG 1. A Samsung Heavy Industries executive said, “The basic design of the Coral Sul FLNG 2 is the same as that of the Coral Sul FLNG 1, and we are currently in the production design stage. It is not far from the end of the year, but we expect to receive an order within the year.”
In addition to the construction of FLNG, Mozambique will launch its first LNG carrier project.
In 2020, TotalEnergies, the leading French company in the Mozambique LNG project, signed letters of intent (LOI) for eight LNG carriers and six LNG carriers with Samsung Heavy Industries and HD Hyundai Samho, all for the transportation of LNG for Mozambique. However, the project was announced to be suspended indefinitely in 2021 due to the unrest in the region as a result of armed rebel attacks.
However, TotalEnergies and its partner Japan’s Mitsui O.S.K. Lines, Ltd. (MOL) recently announced that the project will be restarted.
According to Japanese media reports, MOL President Kenichi Hori said earlier this month: “TotalEnergies, the Mozambican government and MOL are in the final coordination to resume the construction of the LNG project.”
The key to the current project is the raising of shipbuilding funds. In October this year, Patrick Puyan, CEO of TotalEnergies, said that the company would restart the Mozambique LNG project and that 70% to 80% of the funds required have been guaranteed.
If the project is restarted, Samsung Heavy Industries and HD Hyundai Samho are expected to eventually win the large order for these 14 LNG carriers. And because the current cost of LNG carriers has already risen, the final contract price is expected to be significantly higher than four years ago. When the order was placed in 2020, the total value of the 14 LNG carriers of the two companies was approximately US$2.38 billion, and the price of a single ship was only US$170 million, while the current market price of an LNG carrier has reached US$260 million.
It is reported that once TotalEnergies and the Mozambican government complete the negotiations to restart the project, Samsung Heavy Industries and HD Hyundai Samho will renegotiate the construction price with TotalEnergies. If the current market price is finally adopted, the contract value of 14 LNG carriers will be as high as US$3.64 billion.