South Korea`s top three shipbuilders have moved a step closer to winning a $19.2 billion blockbuster deal from Qatar to build liquified natural gas (LNG) carriers that would help them cement their leading position in the global LNG shipbuilding market at a time of dwindling new orders.

Qatar Petroleum, a state-owned petroleum company, said on Monday it signed agreements with Hyundai Heavy Industries Co., Daewoo Shipbuilding & Marine Engineering (DSME) and Samsung Heavy Industries Co. to reserve construction capacity for more than 100 LNG ships through 2027.

The agreements, which mark the single largest LNG ship contract in history, were signed in a virtual signing ceremony attended by Qatar`s Energy Minister Saad Sherida Al-Kaabi, who also serves as CEO of Qatar Petroleum.

The latest deal represents a capacity reservation pact, which precedes a major shipbuilding order to allows the Qatari company to secure construction slots at dockyards of the South Korean shipbuilders.

Buoyed by the news, DSME shares on Tuesday shot up 14.41 percent to close at 27,400 won, Samsung Heavy Industries rallied 18.27 percent to 5,890 won, and Korea Shipbuilding & Offshore Engineering Co. that owns Hyundai Heavy Industries as a shipbuilding affiliate jumped 6.40 percent to 98,100 won.

Qatar, the world’s largest LNG producer, aims to increase its annual LNG output by 126 million tons by 2027 from 77 million tons, which will require more carriers to ferry LNG to buyers.

The Korean big three shipbuilders submitted their respective final proposals in the bid that was also joined by China’s Hudong-Zhonghua Shipbuilding. The bid’s first batch of eight carriers plus an option for another eight carriers went to the Chinese shipbuilder last April, but it was conditional for China’s massive gas purchase from Qatar.

The second batch of 60 LNG carriers was highly expected to go to South Korea as Minister Al-Kaabi made his commitment during his visit to South Korea in January last year and his energy-related discussion with South Korea’s then Prime Minister Lee Nak-yeon.

The Korean shipbuilding industry is also anticipating to hear good news soon from Russia, where Novatek, a state-run Russian energy company, is planning to place an order for 10 LNG carriers for its largest Arctic natural gas project, Arctic LNG 2. Five of these ice-breaking carriers will very likely go to Daewoo Shipbuilding & Marine Engineering for its leadership in specialty LNG tankers.

Samsung Heavy Industries won orders from Russia’s Zvezda for some ice-breaking LNG carriers last September, while DSME swept 15 ice-breaking LNG carriers to be used for the country’s Yamal LNG project in 2014.

An industry official said that 50 to 60 additional orders could come from Saudi Arabia and other countries in the near future, adding that demand for eco-friendly LNG carriers is expanding and this situation will help Korean shipbuilders improve their business performance.

By Noh Hyun and Minu Kim

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