Samsung Heavy Industries Co., a major South Korean shipbuilder, has signed a preliminary agreement worth 869.4 billion won ($635 million) with an African shipowner for a floating liquefied natural gas (FLNG) production unit.
The shipbuilding affiliate of Korea’s top conglomerate Samsung Group said in a regulatory filing on Monday that the contract will expire at the end of September, but could be extended by two months.
The contract, equivalent to 8.8% of Samsung Heavy’s total revenue of 9.9 trillion won last year, marks a potential turning point for the company’s offshore business.
Samsung Heavy builds the topside of an FLNG facility at its shipyard in Geoje, Korea Although Samsung didn’t provide details of the deal, industry sources said that the facility will likely be deployed at the Coral North gas field off the coast of Mozambique, a region drawing growing interest from global energy majors amid rising demand for LNG as a transitional fuel.
If finalized, the deal is expected to expand to as much as $2.5 billion, making it one of the largest FLNG projects for the Korean shipyard.
FLNG units are a massive offshore structure that extracts, liquefies and transfers natural gas from subsea fields.
Samsung Heavy builds the topside of an FLNG facility at its shipyard in Geoje, Korea ‘UNRIVALED COMPETITIVENESS’
Samsung Heavy, which has built some of the world’s most complex FLNG units, said the latest deal demonstrates its "unrivaled competitiveness" in the sector.
In March, Samsung Heavy said it had made a breakthrough in its liquefaction technology, known as SENSE IV, for FLNG production facilities, challenging long-standing dominance by US rivals.
Despite Korea’s dominance in shipbuilding, critical components such as LNG liquefaction systems have long been supplied by US and European firms, including North Carolina-based engineering firm Honeywell International Inc.
Earlier this year, sources said four energy firms – Italy’s Eni S.p.A., US-based Delfin LNG, Canada’s Western LNG and Norway’s Golar LNG – are expected to sign FLNG construction contracts with Samsung Heavy soon.
Write to Jin-Won Kim at jin1@hankyung.com In-Soo Nam edited this article.
