Korean Shipbuilders to finalise KRW6tn deals related to Mozambique project

As French oil company Total Energy has resumed the liquefied natural gas (LNG) project in Mozambique, a renegotiation on the 17 LNG carriers won by Korean shipbuilders has entered the final stage. The total contract value is highly likely to reach US$4.4 billion, exceeding the US$3.0 billion of 2020 when the orders were placed. Moreover, additional orders can be expected from the Mozambican project in the future.

Industry sources say that Korea Shipbuilding & Offshore Engineering (KSOE) and Samsung Heavy Industries are expected to sign the final contracts on the LNG carriers with their clients in July next year.

Total Energy is developing offshore gas fields in Mozambique and plans to produce 12.8 million tons of LNG annually using gas from Mozambique’s District 1.

At the end of 2020, KSOE and Samsung Heavy Industries signed a letter of intent (LOI) to build nine and eight LNG carriers, respectively, with their clients, but the final contract has not been inked because Total Energy announced the suspension of construction as fighter jets linked to the Islamic State (IS) attacked the vicinity of the construction camp.

In the final contract, the ship price is expected to rise from the original. The newbuilding price per ship is expected to reach about US$260 million, which far exceeds the US$180 million set in 2020. This is because there is a premium for securing slots at the dockyards of Korean shipbuilders, which are already fully booked.