South Korean shipbuilder HD Hyundai Heavy Industries has booked a massive $3.9 billion order, the largest single order ever placed with one of the country’s shipbuilders. The announcement of the contract came at the end of a state visit by South Korea’s President Yoon Suk Yeol to Qatar and meetings with QatarEnergy.
The state visit was designed to expand ties between the two countries and build trade opportunities coming after similar efforts by the South Korean president with neighboring countries including Saudi Arabia and the United Arab Emirates. Among the agreements with Qatar, they look to expand cooperation with the LNG industry as well as technology and defense.
QatarEnergy in 2020 had signed a massive deal with South Korea’s three largest shipbuilders reserving construction spots for new LNG tankers. The construction is tied to Qatar’s efforts to expand its LNG production and exports with the opening of the North Field expansion project.
According to officials traveling with President Yoon, the contract for HD Hyundai secures work into 2027 and beyond. The shipbuilder received firm orders for 17 LNG vessels, although reports are they provided a discounted price of just under $230 million per vessel. That is as much as 13 percent lower than other recent contracts. Analysts are however citing expected cost savings in design and material costs due to the size of the order.
“This accounts for almost half of the shipbuilder’s yearly orders and improves the share of the global LNG carrier market held by Korean companies to 81 percent from 74 percent,” senior presidential secretary for economic affairs Choi Sang-mok told reporters after the contract signing. He reported that both Hanwha Ocean and Samsung Heavy Industries are also negotiating deals with QatarEnergy under the 2020 master reservation agreement. Choi said they expect as many as 30 more vessels will be ordered between the other two major shipbuilders.
They highlighted that QatarEnergy has already been linked to 65 orders for LNG carriers placed during 2022. South Korea’s shipbuilders won the contracts for 54 of the vessels, but 11 were also awarded to their Chinese rivals. South Korea is anxious to maintain its lead in the segment as LNG carriers are the highest-value ships built by its companies.
During the state visit, Yoon reportedly secured a total of $4.6 billion in agreements with companies in Qatar. The president’s staff cited the broad reach of the 12 deals and memorandums covering everything from shipbuilding to self-driving cars, solar technology, and the medical and financial industries. The announcements came at the end of a six-day visit to Qatar and Saudi Arabia. Investments and deals signed in Saudi Arabia are reported to be valued at a further $15.6 billion for South Korea.