KSOE Books $2.2B LNG Order Continuing Korea’s Market Lead in 2022

large LNG carrier shipbuilding orders
Orders for 10 LNG carriers pushed to extensively achieve its 2022 target for total new orders (KSOE file photo)

Published Jul 8, 2022 6:15 PM by The Maritime Executive

South Korea’s shipbuilding industry is continuing its strong run in booking new orders with Korea Shipbuilding & Offshore Engineering, the parent company for Hyundai’s shipbuilding operations, reporting two new contracts with a combined value of $2.2 billion. With the order, the company has extensively achieved its target for all of 2022 while booking building slots into 2026.

The new order is believed to be tied to the LNG expansion by QatarEnergy and follows similar orders with KSOE’s two rivals, Samsung Heavy Industries and Daewoo Shipbuilding & Marine Engineering. QatarEnergy in 2020 reserved as many as 100 building slots with the three Korean shipbuilders for LNG carriers to be delivered by 2027.

KOSE reports that it received two contracts for a total of 10 LNG carriers, which followed what was believed to be a token order in June for two LNG that analysts also linked to Qatar. The new order calls for eight 174,000 cbm gas carriers to be built at Hyundai’s shipyard in Ulsan and due for delivery by November 2026. The other order was for two similarly sized LNG carriers to be built by Hyundai Samno for delivery by August 2026.

These orders compare with Samsung’s record largest single order which was announced in June for 14 similarly sized LNG carriers. It was also split between a larger order of 12 ships and a smaller order for two ships. Qatar works through shipowners that own and operate the ships on charter to the Middle Eastern company. Daewoo received the first order linked to Qatar which was for four LNG carriers. All three of the shipyards contracted for the ships at prices of approximately $212 million each, which is below market and is taken as another indication that the orders are part of the long-standing agreement with Qatar.

KSOE reported that these orders combined with previous orders received in 2022 total $17.3 billion. They have received orders for 134 vessels this year, including 34 LNG carriers which is significant because they are higher-value ships that aid with the shipbuilder’s profitability. The company said it has now reached 99 percent of its $17.44 billion target for orders in 2022. Analysts expect the company could reach or exceed the annual target in July which they also did in July 2021.

As a whole, the Korean shipbuilding industry has been posting its strongest order flow in years in 2022. The Korean Ministry of Trade, Industry and Energy said this week that orders during the first half of the year were 9.79 million gross tons, which is the highest level of orders since the first half of 2011. 

With China’s shipbuilding industry struggling with COVID-19 lockdowns and restrictions so far in 2022, the South Koreans were able to regain the lead in the industry for the first time in four years. In the first half of 2018, the South Koreans received 47 percent of the orders compared to China’s 40 percent. This year, the South Koreans received 45 percent of the total orders compared to China’s 43 percent. However, the Koreans continued to dominate the high-value segment with 62 percent of the global total of 11.14 million gross tons. This is despite China’s efforts to grow in LNG and other more lucrative segments of the market.