22-03-2018

S. Korean Shipbuilders Deal with Undelivered Ships to Reduce Risks

South Koran shipbuilders are taking action, such as sale to third parties, against shipowners refusing to receive the delivery of ships. At present, Samsung Heavy Industries and Daewoo Shipbuilding & Marine Engineering have five and six undelivered ships, respectively. These ships are risks on the part of the shipbuilders in that labor and material costs have already been invested.

Under the circumstances, Samsung Heavy Industries sold one undelivered drillship for US$500 million in January this year after Swedish company Stena refused to receive it in July last year. Back in 2013, Samsung Heavy Industries won the US$720 million contract and received US$215 million in advance.

Samsung Heavy Industries is currently using the same method in order to deal with its drillship that was planned to be delivered to Pacific Drilling. The South Korean company already received 30% of the total payment and is looking to fill the rest by selling the ship to a third party.

When it comes to Daewoo Shipbuilding & Marine Engineering, four out of the six are scheduled to be delivered later than previously planned and negotiations are underway for the other two so that the deposit and down payment ratios can be raised. Daewoo Shipbuilding & Marine Engineering is going to sell the ships to third parties if this does not work out.

According to industry sources, both Samsung and Daewoo are expected to be able to find third-party buyers with relative ease as the international oil price is on the rise now.

Source: Business Korea

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