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QP reserves South Korean LNG

shipbuilding capacity in megadeal

QP has agreed to reserve LNG shipbuilding capacity with three South Korean shipbuilders
in an order worth $19bn as the company pushes on with its gas expansion plans

COMMENTARY QATAR Petroleum (QP) announced this week with 2019. Instead, Lee estimated that the three
that it had entered into three agreements with shipyards may now have an order backlog of
shipbuilders in South Korea to secure a major around 18 months.
WHAT: proportion of their LNG shipbuilding capacity “This is the largest single LNG vessel order in
QP has placed an order up to 2027. The order covers over 100 ships and history. We have never seen so many LNG ves-
worth $19bn with South is valued in excess of $19bn, making it the larg- sels ordered in the same year, let alone by a single
Korea’s three largest est deal of its kind. It follows a smaller – but still buyer,” a Credit Suisse analyst, Saul Kavonic, was
shipbuilders. significant – deal that QP announced in April to quoted by Reuters as saying.
reserve LNG shipyard capacity in China. QP did not reveal details of how the order
WHY: The Middle Eastern company said this week is split between the three shipyards. How-
The company is that Qatar had now secured 60% of the world’s ever, Samsung Heavy was cited by Reuters
expanding its LNG LNG shipbuilding capacity – illustrating the as saying it expects to sign deals covering the
export capacity even scale of its ambitions as it sets about expanding 2020-24 period. Neither Hyundai nor Daewoo
as competitors put its gas production and liquefaction capacity. commented on the matter.
the brakes on new Indeed, QP’s LNG carrier fleet programme is the The order follows a similar but smaller
liquefaction capacity. largest ever to be undertaken in the history of the announcement in April, when QP said it had
LNG industry. agreed with Hudong-Zhonghua Shipbuilding
WHAT NEXT: Group, a subsidiary of China State Shipbuilding,
Qatar’s LNG carrier Big spender to reserve LNG as a “significant” proportion of its
fleet programme is the QP’s latest agreements were struck with Daewoo ship construction capacity. That deal is valued at
largest of its kind and Shipbuilding & Marine Engineering, Hyundai $3bn or more, depending on QP’s requirements
will replace part of the Heavy Industries and Samsung Heavy Industries and the extent of China’s LNG shipbuilding
country’s existing fleet. – known as South Korea’s Big Three shipyards. capacity expansion.
Analysts said the deal had come at the right The moves to secure such high levels of LNG
time for the shipyards, which would otherwise shipbuilding capacity come as Qatar works on
have cause to worry about their survival as its North Field expansion project, which under-
orders fell owing to difficult market conditions. pin its ambitions to raise its liquefaction capacity
According to market forecasts cited by a Daishin from 77mn tonnes per year currently to 126mn
Securities analyst, Lee Dong-heon, a 30% drop tpy by 2027. This aggressive expansion is seen
in orders had been expected this year compared by some as going against the tide as others delay

P12 www. NEWSBASE .com Week 22 04•June•2020