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Samsung Heavy to Win $2.5 Billion Offshore Plant Deal

Samsung Heavy Industries (SHI) is about to sign a US$2.5 billion (2.81 trillion won) deal to build a floating LNG facility for a project on the Coral field, a natural gas field located in Area 4 of offshore Northern Mozambique in Africa, early next month. If the company succeeds in winning the project, SHI will obtain another mega offshore project deal worth some trillion won again in four months after it received a US$1.27 billion (1.43 trillion won) offshore plant contract early this year. It will also reach half of this year’s goal to achieve US$6.5 billion (7.3 trillion won) in orders at once.

According to shipbuilding industry sources on May 28, equity investment companies in the Coral FLNG project in Mozambique recently held a steering committee meeting and made a final investment decision (FID) on the Area 4 development project. The project is to produce 3.37 million tons of LNG for 25 years by building a FLNG platform in the Rovuma Basin (Area 4), offshore Northern Mozambique. The total reserves in Area 4 were estimated to be 1.96 billion metric tons of gas, which is equivalent to seven years of global annual LNG consumption, until 2014. EEA, a joint venture between Italy’s state-run energy firm ENI and the China National Petroleum Corporation (CNPC), owns a 70 percent stake in the Coral project, while other concessionaires own a 10 percent stake each such as Korea Gas Corp., Portugal’s Galp Energia and Mozambique’s Empresa Nacional de Hidrocarbonetos (ENH).

SHI formed a consortium with France-based Technip and Japan-based JGC to participate in a FLNG facility tender comissioed by ENI and was selected as preferred bidder, taking the advantageous position to win the deal. As the steering committee consisting of equity investment companies decided to make a FID on the project on the same day, removing all the factors that can possibly break off the deal, it is expected to sign a contract to build the offshore facility in the near future.

For the Coral FLNG project, SHI will be responsible for the engineering, procurement and construction (EPC) of the FLNG facility and construction of the topside, while Technip and JGC will be in charge of the engineering and procurement of the topside, which requires a high level of engineering skills and expertise with long period of experiences and risks.

SHI signed a US$1.27 billion (1.43 trillion won) FPU deal with BP early this year. When the company succeeds in winning the Coral project, its accumulative amount of overseas construction contracts this year will jump up to US$4.8 billion (5.39 trillion won), nearly 74 percent of this year’s goal. SHI will be also the only shipbuilder in South Korea obtaining offshore plant projects after the end of 2014

The Original Posted by Jung Min-hee/Business Korea

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