U.S. sanctions against China's Wison Shipyard last month are expected to increase the dominance of South Korean shipbuilders in the offshore plant market. Samsung Heavy Industries is leading in the floating liquefied natural gas (FLNG) production, storage, and unloading facility sector, while Hanwha Ocean has begun reviving the FLNG project that stalled during the Daewoo Shipbuilding & Marine Engineering era.
According to the shipbuilding industry on the 18th, the U.S. Biden administration designated Zhoushan Wison Offshore and Marine Limited, a Chinese offshore plant specialist, as a target for sanctions just before the end of its term last month. This was due to the company's production and supply of power modules for a Russian LNG project. Wison Shipyard had been the only company in the world, aside from Samsung Heavy Industries, that constructed FLNGs.
Wison Shipyard drew attention last August by securing the construction project for the first FLNG unit of the Delfin Midstream project in the U.S., for which Samsung Heavy Industries had provided the basic design. Delfin plans to install four FLNGs in its LNG project ongoing in the Gulf of Mexico, aiming to produce 13.3 million tons (t) of LNG annually. Of these, the first unit's construction was unexpectedly taken by a Chinese company.
The shipbuilding industry reports that the U.S. sanctions against Wison Shipyard have increased the likelihood of Samsung Heavy Industries securing orders for Delfin FLNG units 2 through 4. The LNG export expansion policy of the Donald Trump administration is also expected to lead to increased FLNG orders.
Samsung Heavy Industries has secured orders for five FLNGs to maintain its global market share of 1. The FLNG is a high-value-added project that enables the exploration and liquefaction of natural gas at sea, with contract amounts reaching 2 trillion to 3 trillion won. Samsung Heavy Industries is expected to finalize the order for the second Coral Sul FLNG in Mozambique within this year. Originally, the order was anticipated last year but was delayed. Samsung Heavy Industries previously built and delivered the first FLNG vessel, the Coral Sul FLNG, for the Mozambique gas field in 2017.
A source in the shipbuilding industry noted, "Wison, which was expanding its foothold by securing new FLNG orders, is now in a situation where new orders have virtually become impossible due to U.S. sanctions, so it is highly likely that Samsung Heavy Industries will benefit from this."
Hanwha Ocean has set a plan to pursue FLNG orders starting this year. Hanwha Ocean became the first in the world to construct an FLNG vessel during its Daewoo Shipbuilding & Marine Engineering period in 2016, delivering it to Malaysia's Petronas. After having no order record for a while, it is now strengthening its offshore plant business following its incorporation into Hanwha Group.
Hanwha Ocean acquired the wind power business from Hanwha Corporation's construction sector and the plant business from its global sector in April last year. In November, Hanwha Ocean and Hanwha Aerospace jointly acquired Singaporean marine equipment manufacturer Dyna-Mac Holdings.
Dyna-Mac is a specialist manufacturer of offshore plant superstructures and is evaluated as having competitive construction capabilities in the FLNG and floating production, storage, and offloading (FPSO) sectors. With the acquisition of Dyna-Mac, Hanwha Ocean is expected to expand its offshore plant production base and enhance synergy in terms of cost competitiveness. Hanwha Ocean is currently constructing an FPSO with a scale of 1.1 trillion won, which was ordered from Brazilian Petrobras.
A Hanwha Ocean official stated, "Due to the sanctions on Chinese shipyards, there seems to be an opportunity in the FLNG and FPSO markets, and we plan to participate actively in bidding."