Samsung Heavy Industries Completes Delivery of Tanker to Sovcomflot 

South Korean shipbuilder Samsung Heavy Industries recently completed the delivery of a new Aframax shuttle tanker to Russia’s state-run shipping company Sovcomflot. Analysts had raised concerns in recent weeks about the shipyard and the Korean shipbuilding industry’s exposure to Russia and the potential problems after the enacting of the financial and banking sanctions after the invasion of Ukraine. 

Samsung is believed to have the largest exposure to Russia. The shipbuilder has a long history of working both with Sovcomflot and a partnership with the Zvezda shipbuilding complex. In 2018, Samsung reported it would form a joint venture with the Russian shipbuilder to advance the development of tankers.

Earlier in March, Korean media reported that Samsung was delaying the delivery of two shuttle tankers ordered in 2019 while closely following developments with Russia. With the sanctions targeting the Russian banking system, there were concerns regarding how the shipyard would be paid for the vessels. In announcing the delivery of the first of the two tankers completed on March 30, Samsung said that the payment was made following the terms of the contract without providing further details. Delivery of the second shuttle tanker is pending with the yard only saying that they expected to complete the delivery shortly.

“Russia-linked orders are heavily focused on liquefied natural gas ships from Korean yards, with Samsung Heavy Industries the most exposed,” Adam Kent, managing director at Maritime Strategies International told BusinessKorea. While explaining that Russia only accounts for two-and-a-half percent of the global orderbook, Kent estimated that Samsung holds orders valued at approximately $5 billion tied to the Russian shipping company. The total orders held by the South Korean yards tied to the Russian companies are valued at more than $8 billion, which includes LNG carriers and equipment.

Late in 2021, Sovcomflot expanded its relationship with the South Korean shipbuilders. In October they announced a new order with Samsung Heavy Industries and Japan’s NYK valued at over $800 million for four 174,000-cbm LNG carriers that would be chartered to Novatek Gas & Power Asia. The shipyard also gave Sovcomflot an option for two additional gas carriers. 

Sovcomflot working with Japan’s Mitsui OSK Lines also placed an order in September 2021 for four LNG gas carriers. The four similarly sized vessels are to be built by Daewoo Shipbuilding & Marine Engineering for delivery in 2024.