- Company signs contract for two units of drill ships and options for two additional ships with Seadrill, a Norwegian firm.
- Order signals the recovery of the marine energy development market from the impact of the financial crisis
[Photo Caption] A Drill Ship of the Same Class Delivered to Seadrill in 2008
Samsung Heavy Industries, which is the first company in the domestic shipbuilding industry to achieve its annual order target for 2010, announced on the 11th that it had signed a contract to build two units of drill ships for Seadrill, a Norwegian firm. The contract amount is USD 1.08 billion.
Thanks to the marine energy development boom, drill ships orders have been active. In 2006 and the three years that followed, approximately 14 units of drill ships were ordered per year, but the market has suffered from sluggish demand since the financial crisis. The number of drill ships ordered in 2009 was just 2.
Samsung Heavy Industries received an order for large drill ships for the first time in 2010, and its success was attributed to its compliance with the tightened safety standards that have been applied since the oil spill accident in the Gulf of Mexico, as well as its highest score in the areas of safety and eco-friendliness, which includes its technology to minimize volatile organic components.
Industry experts believe that the global oil price has recovered to USD 86, which is the pre-crisis level, in two years, and Samsung Heavy Industries’ contract for large drill ships signal the recovery of the marine energy development market.
IEA has upwardly adjusted the average daily oil demand estimates, and investment organizations such as JP Morgan and Bank of America released an outlook for the global oil price of USD 100 per barrel. As Korean shipbuilders are dominating the marine energy development market, the recent market conditions can be interpreted as favorable for Korean shipbuilders.
Samsung Heavy Industries had already delivered three units of the same class of drill ship to Seadrill, so it expects that it will be able to accelerate the design process and save costs.
SHI also announced that it is highly likely to receive additional orders, as the drill shipbuilding contract includes options for two units of additional ships. An “option” is a conditional contract between a shipper and a shipbuilder, under which a shipper shall place a future order with a shipbuilder it has previously contracted with.
Including this drill ship contract, Samsung Heavy Industries has received orders totaling USD 9.1 billion in 2010, and secured the shipbuilding volume for the following 31 months (USD 39.9 billion). It has fortified its position as the drill shipbuilding market leader by receiving orders for 31 of the 51 units of drill ships ordered globally since 2000.