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Daewoo Shipbuilding wins prospective FSRU deal worth $1.6 bn deal from Excelerate Energy

Daewoo Shipbuilding

Delivering what could be a life-saving deal for the financially-strapped Korean shipbuilder, Texas-based Excelerate Energy placed a preliminary order with Daewoo Shipbuilding & Marine Engineering Co. (DSME) for up to seven floating storage and regasification units (FSRUs) worth combined $1.6 billion. 

Excelerate Energy, the world’s largest operator of regasification vessels and developer of LNG import solutions, announced Thursday that it executed a letter of intent with the Korean shipbuilder to order one FSRU in the second quarter this year with the option for commissioning additional six vessels. The Korean shipbuilder separately issued a disclosure on the deal, but said details for the final contract have not been set. 

Given the timeframe and market value of the vessel designed to transport, store and regasify liquefied natural gas onboard, the two are expected to sign the final prospective deal worth $1.6 billion next month. 

The vessel is a successor of the LNG-Regasification Vessel (LNG-RV) with a storage capacity of 173,400 cubic meters built by Daewoo Shipbuilding & Marine Engineering Co. (DSME) in 2005 for the first time in the world. Since the FSRU can handle the LNG gasification process and supply while floating in the sea, it is usually deployed in an area where demand for natural gas surges temporally or access to onshore facilities is limited. It is one of the most high-value products in the shipbuilding industry with high potential growth due to increasing demand for natural gas as a cleaner option to fossil fuel. 

At 1:05 p.m., share of Daewoo Shipbuilding & Marine Engineering Co. (DSME) were unchanged at 44,800 won in Seoul trading due to mixed news. The shipbuilder is reportedly facing a default crisis on 440 billion ($384 million) bonds that mature in April. State-run Korea Development Bank (KDB), its largest shareholder and creditor, reiterated plans to keep the shipbuilder afloat to suggest an additional bailout.

The Original Posted By Moon Ji-woong/Maeil Business News Korea

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