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title SHI makes inroad to icebreaking tanker market
date 2005.11.14
Samsung Heavy Industries(SHI) received orders of three icebreaking tankers, weighing 70,000 tons each, worth a total of US$430 million, from Russias largest state&min;owned shipping company Sovcomflot. This makes SHI to gain significant foothold in a nation which holds the worlds largest amount of crude oil and gas reserves. It is also the first time for a Korean shipbuilder to advance into the global icebreaking tanker market. The significance of this order is that the market is a "blue ocean." By taking the initiative ahead of any other shipbuilder, SHI is now in an advantageous position in the worlds high value&min;added ship construction market, given that oil field development in the polar regions is currently being promoted. This also is a good chance for SHI to expand to building icebreaking LNG ships based on its icebreaking tanker construction technologies. The tanker runs through in ice&min;bound areas, and when alienated in ice mountains, move propellers 180 degrees to back astern, breaking the ices and self finding a new route. The ship is the worlds first icebreaking tanker that can both advance and reverse. Its price is three&min;times that of general oil tankers. This oil tanker is built based on a totally new concept, as it is intended to maximize crude oil transportation efficiency in the polar regions. After delivery, the three oil tankers will run between Varendei oil field at Arctic Ocean North of Russia and the Murmansk Port at Barents Sea. Barents Sea is known as a severely cold area where ship transportation is restricted. The temperature goes down to as low as minus 45 degrees, the sea remains frozen for 210&min;290 days a year covered with 1.5&min;meter thick ice, and a 20&min;centimeter thick snow additionally covers the surface of the ice. Icebreaking tankers are prerequisite for safe crude oil transportation regardless of weather. Given that the development of the oil field in the Artic Ocean in Russia, where 30% of worlds crude oil and gasoline are buried, has begun in earnest, at least 20 icebreaking tankers are expected to be built by 2015. SHI has preoccupied the market of crude oil transportation ships running the polar regions by this order, which is also expected to give the company an advantageous position in the future to get orders to build icebreaking LNG ships. This is not the first time that SHI explored a new market that has yet to be discovered by any other foreign firm, be they domestic or foreign. It has made inroads into niche market unexplored by global renowned shipbuilders in Japan and Europe. In 2003, it rolled out self&min;developed ships on expectation for the expansion of the ice&min;class tanker market – for example, the Baltic Ocean. In 2004, SHI received orders for 11 out of a total of 17 ice&min;class tankers ordered worldwide, taking up 65% of global market share. SHI plans to further concentrate on research and development of ice&min;class tankers, icebreaking tankers, LNG ships, crude oil drilling rigs, ultra&min;large container ships and cruise ships, instead of container ships and oil tankers that fiercely compete with Japanese and Chinese rivals. Its plan is to continue raising orders of high value&min;added ships, which currently stand at 70% share out of the companys total ship orders received. CEO Kim Jing&min;wan said, "The polar region&min;running icebreaking tanker market is a blue ocean for us. We will further strive to take lead in the icebreaking LNG ship construction market as another alternative for crude oil transportation ships."
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