Behind the Scenes of the 23 Trillion Won Qatar LNG Ship Order

Government's 'Ironclad Security'... "No Issues Should Arise in National Large-Scale Exports"

Minister of Trade, Industry and Energy Sung Yun-mo (right) and Hyundai Heavy Industries CEO Ga Sam-hyun (left) pose for a commemorative photo holding the agreement at the 'Qatar LNG Carrier Slot Reservation Contract MOA Signing Ceremony' held on the afternoon of the 1st at the Emerald Room of Lotte Hotel Seoul. (Photo by Ministry of Trade, Industry and Energy) [Image source=Yonhap News]

[Asia Economy Reporter Moon Chaeseok] South Korea's top three shipbuilders have achieved a remarkable feat by securing a Qatar liquefied natural gas (LNG) carrier project worth over 23 trillion won, overcoming the challenges posed by the COVID-19 pandemic. The South Korean government refrained from disclosing this fact until the deadline agreed upon with Qatar to maintain confidentiality.

According to related ministries and the shipbuilding industry on the 2nd, on the 1st (local time), Qatar Petroleum (QP), Qatar's state-owned oil company, announced that it had signed an LNG carrier-related agreement with South Korea's Hyundai Heavy Industries, Samsung Heavy Industries, and Daewoo Shipbuilding & Marine Engineering. According to QP, this is the largest order in the history of LNG carrier contracts.

The virtual signing ceremony held the previous day was attended by Saad Al-Kaabi, Qatar's Minister of Energy and QP CEO; Sung Yun-mo, Minister of Trade, Industry and Energy of South Korea; Lee Sung-geun, CEO of Daewoo Shipbuilding & Marine Engineering; Ga Sam-hyun, CEO of Korea Shipbuilding & Offshore Engineering; and Nam Jun-woo, CEO of Samsung Heavy Industries.

The core of the agreement is that QP will secure a significant portion of the LNG carrier construction slots from these three Korean shipbuilders by 2027. The scale is known to be about 70 billion Qatari riyals (approximately 23.6 trillion won). Neither QP nor the companies disclosed the order quantities allocated to each company.

According to explanations from QP and the Korean shipbuilding industry, large-scale LNG carrier projects begin with contracts to secure shipbuilding slots before formal orders are placed. QP stated that it needs more than 100 LNG carriers by 2027 and has secured about 60% of the world's LNG carrier construction capacity so far. The Korean shipbuilding industry noted that since this is still a pre-order stage, contract terms and the number of ships may change in the future, but it is clear that this is a remarkable achievement for the Korean shipbuilding industry in a large-scale project.

During the confidentiality process with Qatar, the fact that Minister Sung attended the virtual signing ceremony was not disclosed to the media, causing a minor controversy.

An official from the Ministry of Trade, Industry and Energy explained, "Since Qatar requested confidentiality, informing the ministry's press corps could have led to leaks to the industry and others. Because the industry did not impose a separate embargo, if it had been reported prematurely, it could have jeopardized this large-scale national export project. To prevent this, we considered Qatar's opinion."

Meanwhile, Qatar, the world's largest LNG producer, plans to expand its annual LNG production from the current 77 million tons to 126 million tons by 2027 and is pushing forward with expansion. As LNG production increases, a large number of carriers will be needed to transport it.