Page 14 - GLNG Week 12 2023

GLNG ASIA GLNG

Carrier sale in Korea sends ripples

through local, foreign LNG industry

SOUTH KOREA SOUTH Korea’s premier LNG shipping firm, authorities as slow-steam rules come to bear
Hyundai LNG Shipping (HLS), has seen its lead- to aid with environmental concerns related to
IMM Private Equity, ing investor put 100% of its stake in the regional global shipping.
a Seoul-based capital carrier powerhouse up for sale. It is thought this in turn will lead to longer
market firm, last week IMM Private Equity, a Seoul-based capital delivery times for most Asian buyers.
made public its bid to market firm, last week made public its bid to sell The reason for this is that carriers based in
sell its interests in HLS. its interests in HLS. European or US ports are more likely to prefer
Instantly questions were raised in Korea as shorter journey times to easily reachable delivery
to the reliability of LNG supplies making their points in Western nations, as opposed to seeing
way to Asia this year, particularly as Seoul con- vessels at sea for weeks on end while heading
tinues with plans to increase domestic reliance East.
on nuclear power. It is thought China, finally emerging from
It is understood that prior to the announce- COVID, and known to be on the lookout for
ment five foreign firms had been listed as poten- LNG cargoes and shipments of other fossil fuels,
tial buyers, according to sources in the Korean will be the Asian nation worst affected, in the
capital. short term at least.
These firms are understood to include names Japan, as major player in LNG purchases in
from Denmark, Greece, the UK and US, but recent years, is trying to cut back and like South
non-disclosure agreements mean no further Korea, it is making moves back in the direction
details are yet available. of nuclear power.
Media reports in Korea do indicate that in Another reason for the difficulties facing
excess of 20 firms in total, including financial Asian buyers is the belief that Europe is now seen
investors and what local reports termed poten- as a major player in LNG sales rather than the
tial “strategic” buyers, are known to have shown fringe market it once was.
an interest in the sale. As a result, the continental head-to-head is
The IMM asking price is believed to be in the likely to last for the foreseeable future. ™
KRW600bn-700bn range, around $467.3 mn at
the higher end, and is being overseen by a local
securities branch of the worldwide investment
banking firm Citigroup.
If successful in the sale, IMM will only
just be clearing the KRW500bn they paid for
HLS under a previous corporate make-up in
2014.
One of the prime reasons so many foreign
buyers are pondering the acquisition of HLS
centres of the firm’s single largest customer is
that First Korea Gas Corp is the world’s biggest
importer of LNG by volume at present.
It is believed that IMM initially wished to sell
HLS to another Korean buyer, given the firm’s
contribution to domestic energy security.
None were forthcoming, however, at least not
at the IMM asking price, although negotiations
were deemed “advanced” with several potential
buyers before the potential deals fell through.
On paper the purchase itself is highly lucra-
tive, with all the HLS vessels tied down to long-
term contracts. Some of these are known to be as
long as 20 years in length.
While this bodes well in terms of guaranteed
carrying routes, and potential income, there is an
increasing sense that contracts notwithstanding,
acquiring the LNG to transport around Asia and
the world will itself prove more difficult than in
the past.
This is in part down to recent moves to regu-
late vessel movements by international shipping

P14 www. NEWSBASE .com Week 13 30•March•2023