At a huge shipyard operated by Samsung Heavy Industries Co. on Geoje, an island in South Gyeongsang province some 390 km south of Seoul, several hundred workers, maybe more, were assembling a new offshore structure for Malaysia’s Petronas, one of the world’s top gas and oil firms, under an unusually hot springtime sun in early March.
The mammoth structure, known as a floating liquefied natural gas (FLNG) production facility, weighs 50,000 tons and spans 2.5 football fields.
It’s the world’s first near-shore FLNG plant, according to a Samsung Heavy official.
Unlike conventional offshore FLNG facilities, which extract and process gas at sea, the new structure, or ship rather, functions as a maritime LNG terminal, liquefying and storing the fuel before carriers ship it to markets.
FLNG units are among the most complex offshore structures, requiring three times the workforce per hour compared to conventional vessels.
“FLNG construction sometimes requires up to 2,500 workers simultaneously due to its complexity,” Kim Hyun-ho, Samsung Heavy’s offshore plant production manager, told The Korea Economic Daily.
KOREAN SHIPBUILDERS STAND TO BENEFIT FROM TRUMP POLICY
Analysts said Samsung and other Korean shipbuilders stand to benefit from a geopolitical shift that has sidelined Chinese competition in the industry.
Washington’s tougher stance on Beijing is reshaping the global LNG supply chain.
In January, the Trump administration imposed sanctions on China’s Zhoushan Wison shipyard – Samsung Heavy’s only serious competitor in FLNG facility construction.
As the US government seeks to expand liquefied natural gas (LNG) exports, global energy majors are now turning to the Korean shipbuilder.
European and North American energy firms are also working to mitigate exposure to Chinese yards.
According to industry sources on Tuesday, four energy firms – Italy’s Eni S.p.A, US-based Delfin LNG, Canada’s Western LNG and Norway’s Golar LNG – are set to finalize FLNG construction contracts with Samsung Heavy soon.
Samsung Heavy has already begun work on Eni’s Mozambique FLNG project, with the signing of an official contract now a mere formality, sources said.
Delfin LNG originally planned to involve China’s Wison in its second and third FLNG facilities out of four, but recently pivoted to Samsung, they said.
Samsung is also said to be in talks with unidentified global energy firms about building FLNG facilities in Argentina and Suriname.
With at least four FLNG unit construction orders in the pipeline, Samsung Heavy is expected to secure contracts worth 8 trillion won ($5.5 billion) this year, sources said.
Unlike other commercial vessels, which usually yield single-digit margins, FLNG units boast double-digit profit margins as building them requires high technology, which bodes well for Samsung, which controls 55% of the FLNG construction market.
Samsung Heavy won an FLNG unit building contract in 2011 from Shell plc – the world’s first FLNG facility construction order from an energy major.
LNG VESSEL OPPORTUNITIES FOR OTHER KOREAN SHIPBUILDERS
Meanwhile, Samsung’s domestic competitors are also seeking to capitalize on booming LNG-related projects.
HD Hyundai Marine Solution Co., a ship repair and maintenance service unit of the world’s No. 1 shipbuilder HD Hyundai Heavy Industries Co., stands to benefit from rising demand to convert aged LNG carriers into floating LNG terminals.
HD Hyundai Marine, the only Korean company with such ship conversion technology, expects to secure its first order to convert aging LNG carriers into floating storage and regasification units (FSRUs) this year.
Emerging economies such as Brazil, Indonesia and Bangladesh – seeking to import LNG from the US via sea routes – are showing keen interest in ship conversion, along with European nations that have traditionally relied on Russian pipeline natural gas, sources said.
Hanwha Ocean Co., which last year acquired a 100% stake in Dyna-Mac Holdings Ltd., a Singaporean floating facility designer and manufacturer, is also targeting LNG-related offshore contracts over the coming months.
Source: Samsung Heavy Industries
