Samsung Heavy to clinch maximum 900 bil. won deal with Norwegian firm

Samsung Heavy to clinch maximum 900 bil. won deal with Norwegian firm

Samsung Heavy Industries (SHI) is expected to clinch a maximum 930 billion won ($777 million) shipbuilding deal with a Norwegian ship-owning company. It will be a crucial deal for the debt-ridden shipyard that has been suffering from liquidity problems and low cash flow as well as increasing debt.

According to the shipbuilding industry-focused magazine TradeWinds, Thursday, Norwegian LNG carrier Hoegh LNG has signed a letter of intent (LOI) with SHI, one of Korea’s top three shipyards, for one firm and three optional floating storage and regasification units (FSRUs).

Under the deal, SHI will first build one 170,000-cubic-meter FSRU, and additionally build three more units if Hoegh LNG is pleased with the first.

Hoegh LNG said on its webpage the “complete shipbuilding contract for the firm vessel is expected to be signed by mid-January 2017.”

“Last week, we secured a new FSRU employment contract, and today we follow up with ordering our next series of FSRU constructions, in line with our declared strategy. With this agreement with SHI, whose selection has been subject to a competitive international tender, Hoegh LNG has taken advantage of a very favorable new building market to position itself for further expansion in the FSRU segment,” said Sveinung J.S. Stohle, president and CEO of Hoegh LNG.

Neither company commented on the actual scale of the contract, but the market price for one FSRU is nearly $200 million on average. If SHI wins the remaining three orders as planned, the total contract scale is expected to reach nearly $800 million.

The vessels have scheduled delivery dates of two units in 2019 and the remaining two units in 2020, according to Hoegh LNG.

Hoegh LNG is an affiliate of the international shipping company Leif Hoegh & Co, which was founded in 1927 by Leif Hoegh. It provides and operates various floating energy solutions, including LNG import terminals, LNG carriers and FSRU operations.

Based in Bermuda, Hoegh LNG established its footholds in Norway, Singapore, the U.K., the U.S., Indonesia, Lithuania, Egypt and Colombia. It employs approximately 110 office staff and 500 seafarers around the world.


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