On December 26, Samsung Heavy Industries announced that it has signed a contract with an Asian shipowner for the construction of three very large ethane carriers (VLECs).
The total value of the order is 742.2 billion won (approximately $500 million), with a single vessel cost of approximately $167 million, and is expected to be delivered by December 2027 in sequence.
Including this contract, Samsung Heavy Industries has received about $7.3 billion (36 vessels) in orders this year, achieving 75 percent of its annual target of $9.7 billion.
In terms of vessel types, there are 22 LNG carriers, 2 VLACs, 1 shuttle tanker, 4 medium-sized tankers, 4 container ships and 3 VLECs, of which 31 are environmentally friendly (LNG and ammonia), accounting for 86% of the total number of orders.
Samsung Heavy Industries expects to receive another FLNG order for the Coral Sul project in Mozambique by the end of the year. Samsung Heavy Industries has already started the production design work for the FLNG. The FLNG is valued at $2.5 billion, and Samsung Heavy Industries will also use this to fulfill its annual order target.
In addition to this, Samsung Heavy Industries’ 2020 Letter of Intent (LOI) agreement for eight LNG carriers with TotalEnergies, the lead method country for the Mozambique LNG project, is expected to start in the near future.
At that time, the project was announced to be suspended indefinitely in 2021 due to regional unrest in Mozambique. Recently, however, both TotalEnergies and its partner, Japan’s Mitsui O.S.K. Lines, Ltd. (MOL), announced that the project would be restarted and that “TotalEnergies, the Government of Mozambique and MOL are in the process of finalizing coordination to resume construction of the LNG project.”
If the project is restarted, Samsung Heavy Industries is expected to finally get the eight LNG carriers order, and the final contract price is expected to be significantly higher than four years ago. The final contract price is expected to be significantly higher than it was four years ago, as the current cost of LNG carriers has long since risen. When the order was placed in 2020, the price of a single LNG carrier was only $170 million, while the current market price of a LNG carrier has reached $260 million.
Samsung Heavy Industries will reportedly renegotiate the construction price with TotalEnergies once TotalEnergies and the Mozambican government complete negotiations to restart the project. If the contract is eventually signed at current market prices, the value of the contract for the eight LNG carriers will exceed $2 billion.