South Korea’s Daewoo Shipbuilding & Marine Engineering Co. (DSME) bagged an order to build five 300,000-ton very large crude carriers (VLCCs) for Hyundai Merchant Marine Co. with an option of five more vessels.

DSME said Sunday it recently signed a letter of intent (LoI) with Hyundai Merchant Marine. Under the terms, it will construct five VLCCs first and may construct up to five more upon additional request. Final agreement will be concluded by the end of July.

Although the two companies are still in talks over the financial terms, but given current market conditions a VLCC would likely cost $80 million. DSME will be paid more than that per each carrier. If it ends up building 10 carriers for Hyundai Merchant Marine, it would land on a whopping 900 billion won ($792.3 million) in total.

The latest deal follows many others between the two Korean ship builder and shipper. DSME previously received an order from Hyundai Merchant Marine to build five 13,100 twenty-foot equivalent unit (TEU)-class container ships back in 2011.

In late 2013, Hyundai Merchant Marine had six 10,000 TEU container ships - which were to be chartered and operated for London-based Zodiac Maritime Agencies Ltd. - built by DSME.

DSME also recently secured an order worth $250 million build three 318,000-ton VLCCs for Maran Tankers Management Inc., a subsidiary of Greek shipping giant Angelicoussis Shipping Group.

“Many shippers at home and abroad have significant trust in DSME’s technology and competitiveness,” said DSME chief Jung Sung-leep. “We will deliver quality vessels to those and get back on our feet in return for their trust,” he added.

DSME has won total of $770 million worth orders including two liquefied natural gas (LNG) carriers and five VLCCs so far this year.

By Kim Jung-hwan

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