Page 7 - GLNG Week 02 2022

GLNG COMMENTARY GLNG

HHI and DSME
together control at
least 60% of the LNGC
construction market.

remains potentially months away, and faces con- HHI has said that it may challenge the EC’s
siderable opposition. decision, and criticised its focus on market
Against this backdrop, a growing number shares.
of US LNG cargoes have been diverted from “It is impossible to evaluate market dom-
Asia – a traditional winter market – to Europe. inance by just market share alone in the ship-
According to ship-tracking data compiled by building market and the market structure makes
Bloomberg, 41 US LNG cargoes either had it difficult for a certain company to monopolise
declared destinations in Europe or were on a it,” HHI stated.
likely path to the continent as of January 13, The shipyard first started pursuing the acqui-
compared with 24 heading to Asia. sition of DSME in 2019, in part to tackle over-
“LNG imports have been the saving grace for capacity in the shipbuilding sector, though
European supply in the short term,” an Energy demand for new ships is now picking up.
Aspects LNG industry analyst, David Seduski, South Korea’s Ministry of Trade, Industry
was quoted by Bloomberg as saying. and Energy also criticised the commission’s
And while short-term supply pressures may decision, saying it regretted the rejection of a
ease, current trends could cause EU countries deal that had already been endorsed by China,
– among others – to view LNG imports as more Singapore and Kazakhstan.
of a priority. However, the South Korean government also HHI has said that
said the decision might have a limited impact
What next? thanks to the recovery in global ship orders. it may challenge
These developments have informed the EC’s “The industry is seeing much better condi- the EC’s decision,
thinking on the HHI-DSME merger. tions than in 2019 and we will continue search-
“Large LNG vessels are an essential element ing for the right ‘civilian’ operator for DSME,” and criticised its
in the supply chain of liquefied natural gas the government said in a statement jointly
(LNG) and enable the transport of this source released by multiple ministries. The statement focus on market
of energy around the globe. LNG contributes to referred to the state-run Korea Development
the diversification of Europe’s source of energy Bank’s decision to sell its majority stake in shares.
and therefore improves energy security,” stated DSME to HHI.
the commission’s executive vice-president, Mar- The merger also needs approval from Japan
grethe Vestager, who is also the Commissioner and South Korea, as well as the EU, before it can
for Competition. “The merger between HHIH be finalised. Indeed, the Korea Fair Trade Com-
and DSME would have led to a dominant posi- mission, which is also looking at the merged
tion in the global market for the construction of company’s hold over the shipbuilding materials
large LNG vessels, for which there is significant and parts market, is expected to make a decision
demand from European carriers. Given that no on the transaction after hearing the EU’s deci-
remedies were submitted, the merger would sion. However, the EC’s veto makes the merger
have led to fewer suppliers and higher prices for unworkable in its current form, as the new com-
large vessels transporting LNG. This is why we pany would be prevented from doing business
prohibited the merger.” with the EU under the bloc’s competition law.™

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