Samsung Heavy Industries Secures $1.5B Offshore Production Facility Contract, Potentially from Petronas
South Korean shipbuilding titan, Samsung Heavy Industries (SHI), announced on Thursday that it has procured an order for an offshore production facility from an anonymous Asian shipowner, widely speculated in the industry to be Petronas, Malaysia’s state oil firm. The deal, worth KRW 1.9611 trillion (around $1.5 billion), makes up nearly 30% of SHI’s sales in 2021.
This contract marks a significant milestone for SHI as it’s the first offshore production facility order that the shipbuilder has signed in three years, following Indian conglomerate Reliance’s RUBY FPSO order in 2019. As a result, SHI has now secured orders worth $9.4 billion for 49 vessels so far in 2022, according to South Korean news outlet, Pulse.
While SHI has yet to confirm the client’s identity, industry reports from sources like TradeWinds suggest that the order originated from Petronas. If these reports hold true, this would mean the upcoming facility will be Petronas’ third Floating Liquefied Natural Gas (FLNG) unit, supplementing the PFLNG SATU and PFLNG DUA units currently operating at the Kebabangan and Rotan offshore gas fields, respectively.
In December 2021, Petronas awarded two Front End Engineering Design (FEED) contracts to a JGC Corporation-Samsung Heavy Industries consortium and to Saipem. These contracts marked the launch of an international dual FEED design competition for a nearshore liquefied natural gas (LNG) project in Sabah, Malaysia. This project, which aims to have a minimum capacity of 2.0 million tonnes per annum (MTPA), is the first of its kind in Malaysia.
The FEED design competition is set to span 10 months, with the Final Investment Decision (FID) expected by the end of 2022, according to Petronas. Constructing the nearshore plant is projected to be simpler than its offshore counterpart, as it will be located within a protected bay area, ensuring improved production uptime. Upon completion, the nearshore LNG unit will increase Petronas’ LNG production from floating LNG facilities from 2.7 MTPA to 4.7 MTPA.