State-run Korea Gas Corporation (KOGAS), the world's largest LNG importer, will soon place shipbuilding and maintenance orders with local shipyards, as part of efforts to help them weather their worst-ever slump, its chief said Monday.
KOGAS president Lee Seung-hoon said it will advance the schedule of placing orders for two new LNG carriers to the first half of next year and assign sizable maintenance work for its large LNG carriers to local shipyards.
"We are working to place an order for two LNG ships next year," Lee said in an interview with Yonhap News Agency. "The order may be given to local shipyards."
Hyundai Heavy Industries shipyard in Ulsan, about 410 km (255 miles) southeast of Seoul / Image: Lee Jae-Won
The construction of a LNG carrier with a capacity of 3,500 tons normally costs a 150 billion won (US$134 million).
"At the moment, demand for global LNG is waning, which works to reduce demand for new LNG carriers," he said. "As new shipbuilding orders are declining, we are looking at an option to assign maintenance work to local shipbuilders as well."
His remarks came as the country's shipyards are faced with a sharp drop in new orders and increased costs stemming from a delay in the construction of offshore facilities.
The nation's big three shipyards -- Hyundai Heavy Industries Co., Daewoo Shipbuilding & Marine Engineering Co. and Samsung Heavy Industries Co. -- racked up a combined loss of over 8 trillion won last year. It was the first time that all three of the nation's largest industry players registered losses due to a delay in the construction of offshore facilities and a sharp drop in new orders.
Daewoo Shipbuilding attributed the loss to setting aside more for potential compensation for a delay in the construction of ships and tightened accounting audit.
The company said its business performance may improve during the second half of the year.
It added that it will continue to sell non-core assets, reduce costs and take other restructuring moves which will help it raise about 5.3 trillion won in cash.
Last year, Daewoo Shipbuilding's losses came to 2.9 trillion won.