Korean yards fighting to win massive LNG-FPSO order

The big three shipbuilders in South Korea are fiercely competing to win a massive LNG-FPSO order to be placed by Royal Dutch Shell. This mega project, said to cost some $4bn-plus, calls for the construction of an LNG-FPSO with a length of 468m and a width of 74m which would make it the world’s largest vessel of its kind. The unit will produce 3.5 million tons of LNG per year once completed.

The oil major plans to award the front-end engineering and design (Feed) contract for the vessel in around May or June and place the final order at the end of this year or at the beginning of next year.

Shipbuilders regard winning this project as the key to holding a dominant position in the offshore market. While merchant ship market is in a severe slump, offshore sector including FPSOs, drillships, etc is expected to become the sole new engine of growth for shipyards as cash-rich oil majors are making steady investment in the sector despite the global economic downturn.

The big three and their contractor partners submitted commercial un-priced bids for Shell’s giant LNG-FPSO unit last month. The consortium which wins the Feed contract is expected to be chosen as the final winner in the order-receipt competition and they are said to be now concentrating all of their energies on the project.

Hyundai Heavy Industries recently completed the construction of the ?H Dock’, a dock for building FPSO, which is equipped with two world’s largest 1,600-tonne goliath cranes. Daewoo Shipbuilding & Marine Engineering is putting up its experience of having successfully completed eight projects worth $4.9bn contracted with Chevron during the past 15 years and of having constructed four FPSOs to date.

Samsung Heavy Industries is boasting its experience of having developed an LNG-FPSO for the first time in the world. It had received orders for four LNG-FPSOs from FlexLNG of the UK last year and one more from a European owner with a storage capacity of 210,000m3 at the beginning of this year. In addition to the 210,000m3 capacity LNG-FPSO, Samsung has also been developing a grand-scale LNG-FPSO with a capacity of 560,000m3 and it plans to concentrate its efforts on exploiting LNG-FPSO market this year. Ice-class LNG carriers and LNG-FSRUs are also being developed at Samsung.

Major energy developing firms in Europe, America, Japan and Brazil such as Royal Dutch Shell and Exxon Mobil are planning to order some 30 LNG-FPSOs. Industry experts also expect the orders for LNG carriers which stood at just six ships last year to increase this year to more than 20 from LNG producing countries such as Nigeria and Russia as the natural gas development market gets revitalized.