Already at the forefront of the global liquefied natural gas (LNG) vessel market, South Korean shipbuilding companies are turning their focus towards burgeoning marine plant orders thanks to increasing natural gas prices and demand for LNG. Floating liquefied natural gas (FLNG) projects could emerge as a new growth engine for these shipbuilders as LNG increasingly becomes a transitional fuel towards carbon neutrality and floating production storage and offloading units conduct LNG operations to develop offshore natural gas resources.

According to KB Securities and industry sources on Sunday, three major Korean shipbuilders—HD Korea Shipbuilding & Offshore Engineering, Samsung Heavy Industries, and Hanwha Ocean—are poised to expand the scale of their global marine plant project orders. Projections indicate that the order size, which stands between $7 to $8 billion in 2023, is expected to swell to $9 to $11 billion by 2025.

The outlook on increased natural gas prices is behind this surge in marine plant orders. Despite recent fluctuations, with the price of West Texas Intermediate (WTI) hovering around $75 per barrel, the U.S. Energy Information Administration (EIA) forecasts a climb to $90.34 per barrel in the second quarter of 2024.

But the larger catalyst remains the escalating demand for LNG. Serving as a low-carbon alternative to fossil fuels, LNG has been acting as a bridge towards zero-carbon fuels such as hydrogen and ammonia and global demand in the sector is increasing.

Korean shipbuilders are concentrating on securing contracts for FLNG projects, which involve the offshore extraction, refining of natural gas into LNG, and its subsequent storage and handling. Among them, Samsung Heavy Industries is currently the most proactive. The company is highly likely to secure the Mozambique Coral Sul FLNG project, commissioned by Italy’s largest energy company ENI, by the end of 2023, with an expected total contract value of $2 billion. Industry insiders predict Samsung Heavy Industries’ success in securing contracts for three upcoming FLNG projects next year in the United States (the Delfin project) and Canada (Cedar and Ksi Lisims projects), with a combined minimum contract value of $6.4 billion.

Hanwha Ocean has also reportedly participated in the pre-feed work for Chevron’s gas field project “Leviathan”.

By Choi Hyun-jae and Minu Kim

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