South Korea’s Samsung Heavy Industries Co. that has clinched no new orders over the past year is soon expected to win a number of contracts worth over $3 billion in total to build a large offshore plant and liquefied natural gas (LNG) carriers, according to multiple sources in the shipbuilding and banking industries.

Source said on Tuesday that Samsung Heavy Industries has recently tapped major global commercial banks to issue performance bonds and advanced payment bonds for an offshore plant project worth in between $2.6 billion and $2.7 billion. Also, the shipbuilder under Samsung Group has been in the process of hiring an accounting firm that will evaluate overall business feasibility and provide consulting services as to whether the project is economically viable, hinting that Samsung Heavy Industries’ winning a large offshore plant project is imminent.

An unnamed official from the shipbuilding industry said Samsung Heavy Industries has practically obtained a large offshore plant order from Italian energy company Eni S.p.A. to build a floating LNG carrier as part of a coral project to develop natural gas in the waters near Mozambique, and that an announcement will be made soon. The Korean company has formed a consortium with Technip S.A. in France and JGC Corporation in japan for the project.

Of the total project worth in between $5.2 billion and $5.4 billion, Samsung’s share is expected to be worth about half up to $2.7 billion.

Performance bonds and advanced payment bonds are often requested by a client placing an order to its contractor to guarantee the completion of the project and protect against any possible losses in case of the failure of completing the project. When it comes to the offshore plant sector, advance payment bonds are issued like a refund guarantee that is necessary in the process of building a merchant vessel.

Meanwhile, Samsung Heavy Industries is also likely to win an order to build two large LNG carriers from Monaco’s GasLog Ltd., according to sources. The contract is expected to be worth $400 million considering the current market price of an LNG carrier, which is trading at $200 million. Multiple sources from the shipbuilding industry expect that Samsung Heavy Industries would make an official announcement of winning the large FLNG project in Mozambique and LNG carrier project in Monaco as early as October.

Samsung Heavy Industries is also vying to win an order to be placed by Hong Kong-based container shipping company Orient Overseas Container Line (OOCL) to build six large container vessels. The Korean shipbuilder is also in negotiations with India’s Gail Ltd. to receive an order to build nine LNG carriers.

By Park Yong-beom

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