$1.1B Order from Seapeak Pushes Samsung Past $9B Mark for 2022

LNG carrier newbuilds
Seapeak ordered five LNG carriers driving Samsung past its target for 2022 orders (Seapeak)

Published Nov 23, 2022 5:35 PM by The Maritime Executive

Maintaining its strong position in the LNG carrier newbuild market, South Korea’s Samsung Heavy Industries has recorded $9 billion in orders for 2022 surpassing the shipbuilder’s target for orders. While overall newbuild orders have been slowing from the record pace of 2021, the Korean shipbuilders have been able to leverage their experience in the LNG carrier market capturing the strong demand for new ships to achieve another strong year and stretching their orderbooks to 2027.

Headquartered in Vancouver, Canada, Seapeak, which was the successor to the former Teekay LNG, became the latest shipowner to announce large LNG carrier order. The company has contracted with Samsung to build five, 174,000-cubic meter M-type, Electronically Controlled, Gas Admission (MEGA) propulsion LNG carriers. The contract, which is valued at $1.1 billion calls for the delivery of the new vessels in 2027.

Seapeak is already one of the world’s largest independent owners and operators of liquefied gas carriers, providing services primarily under long-term, fee-based charters through its interests in 46 LNG carriers, 20 mid-size LPG carriers (including two on order) and six multi-gas carriers. The company reports that the five new LNG carriers will each operate under a fixed-rate time-charter contract with an international energy major for a firm period of ten years.

This is the latest addition to the strong global order book for LNG carriers as many of the world’s leading shipping companies are working to expand their fleets, in part to meet demand as Qatar nears completion of a major expansion project in its LNG field while the U.S. has also expanded exports to countries ranging in Europe to China. As of October, analysts at Wood Mackenzie calculated that over 127 orders had been placed in 2022 for additional LNG carriers.

Samsung highlights that with this order it reached a record 35 LNG carrier orders in 2022 while so far, its total orders for this year are for 45 vessels. It is an all-time record for the number of LNG carriers ordered in a single year from the shipyard.

The value of all the orders reached $9.2 billion pushing the shipyard more than four percent past its target of $8.8 billion for orders in 2022. This is the second consecutive year that the company has exceeded its target value for orders. Samsung, like most of the major shipyards, had forecasted that order volumes would be flat or decline versus 2021. Last year, Samsung had targeted $9.1 billion but ended 2021 with $12.2 billion in total orders, which equaled 134 percent of its annual target of $9.1 billion. However, despite the strong orders the shipbuilder has been recording financial losses due to increasing costs including steel and labor.

“Continued large orders will lead to sales growth after 2023 and will result in a reduction of fixed costs,” Samsung forecasted. In addition to improving profitability through raising prices, the shipbuilder is forecasting a return to profitability based on its focus on high-value newbuilds and increased efficiency in its operations.

South Korea’s other two large shipbuilders, Hyundai Heavy Industries and Daewoo Shipbuilding & Marine Engineering, are also benefiting from the strong demand for LNG carriers. Korea Shipbuilding & Offshore Engineering, the holding company for the shipbuilding operations of Hyundai Heavy Industries Group, reported at the end of the third quarter it has added $22.15 billion worth of orders for 186 vessels, exceeding this year’s full-year target of $17.44 billion. Similarly, DSME has filled its yearly target of $8.9 billion with orders for 34 LNG carriers, six containerships, and one offshore plant. Like Samsung, it is the second consecutive year in which DSME has reached its yearly target.