Analysts said today that South Korean shipbuilding companies have received support in light of the increasingly difficult conditions in the market from an order for ships of liquefied natural gas worth 19 billion dollars from Qatar Petroleum, according to Reuters reported.
Qatar Petroleum, which is run by the state, signed agreements with three major shipbuilding companies on Monday to purchase more than 100 ships until 2027, which is the largest order ever for LNG ships.
Analysts said that at a time when the sharp decline in the market looming, the orders came at an appropriate time for "Daewoo" for shipbuilding and marine engineering, "Hyundai" Heavy Industries Holding and "Samsung" for heavy industries.
Li Donghyun, an analyst with Daichen Securities, said the companies were "concerned about their survival next year if they did not win this Qatari deal."
"This is the largest order for LNG ships in history. We have not seen an order for such a number of ships in one year, as well as from one buyer," said Sol Kavonjic, an analyst at Credit Suisse.
The sector suffers from a decline in shipbuilding activity for an extended period, which has resulted in huge losses, job cuts and financial rescue from the government.
Li Dong said that market expectations indicate a 30% decrease in orders this year compared to the previous year.
In turn, Park Moon-hyun, an analyst at Hana Financial Investment, said the deal may represent "an opportunity for South Korean shipbuilding companies to overcome setbacks faced and focus on what they have excelled in."
Country commitment
Samsung Heavy Industries said it expects to sign deals from this year to 2024, and predicts a positive impact of orders from shipping companies that are considering the purchase request for LNG ships.
Prior to the signing of the agreements yesterday, Saad bin Sharida Al-Kaabi, Qatar’s Minister of State for Energy Affairs, Managing Director and CEO of Qatar Petroleum, confirmed that signing the agreements confirmed his country’s commitment to plans for expansion of the North Field, even in light of these exceptional times in the world today.
"We are proceeding with the implementation of the expansion projects of the North Field to raise Qatar's production capacity of LNG from 77 million tons annually today to 110 million tons annually in the year 2025, and to 126 million tons annually in the year 2027, in order to ensure a reliable supply of additional clean energy for the world".
The Qatari Minister stated that through the conclusion of these important agreements, Qatar Petroleum has reserved about 60% of the global capacity to build LNG tankers until the end of the year 2027 to meet the requirements of its future fleet of this type of tanker.
Last April, Qatar Petroleum signed an agreement with the Hudong Zhonghua Shipbuilding Group Ltd. to reserve a capacity to build a number of tankers in China worth more than three billion dollars.