Due to the impact of shale gas, major offshore oil developers are reducing offshore crude oil exploration, causing a contraction in investment in offshore equipment. If this situation continues, the three major Korean shipbuilders, Hyundai Heavy Industries, Samsung Heavy Industries, and Daewoo Shipbuilding & Marine Engineering, will find it difficult to achieve their annual order targets this year.
Global orders for offshore equipment have fallen significantly this year compared to last year. Industry insiders explain that oil giants are delaying offshore project development, wavering between shale gas and offshore oil exploration.
According to reports, global orders for offshore equipment totaled US\$15.5 billion from January to April this year, down US\$1 billion from the same period last year. Domestic orders for offshore equipment in South Korea also fell from US\$5 billion in the same period last year to US\$3.9 billion.
Hyundai Heavy Industries has not received any Floating Production, Storage and Offloading (FPSO) orders since February last year. From January to May last year, Hyundai Heavy Industries received US\$5.3 billion in offshore equipment orders, but only less than US\$1 billion during the same period this year. Hyundai Heavy Industries' order target for its offshore engineering department this year is US\$6.9 billion, which seems quite difficult to achieve based on the current situation.
Daewoo Shipbuilding & Marine Engineering faces an even more difficult situation than Hyundai Heavy Industries. Daewoo Shipbuilding & Marine Engineering has not received any offshore equipment orders this year. From January to May last year, Daewoo Shipbuilding & Marine Engineering received a total of US\$3.5 billion in orders, including two fixed platforms and one module. Notably, offshore equipment orders account for more than 60% of Daewoo Shipbuilding & Marine Engineering's total sales (approximately US\$8.9 billion). Therefore, the difficulties in securing offshore equipment orders mean that Daewoo Shipbuilding & Marine Engineering will find it hard to achieve its annual order target this year.
Compared to Hyundai Heavy Industries and Daewoo Shipbuilding & Marine Engineering, Samsung Heavy Industries' offshore order performance is slightly better. As of May this year, Samsung Heavy Industries has received orders for two drilling ships and one FLNG, with a total value of US\$2.9 billion. However, Samsung Heavy Industries' annual order target this year is US\$15 billion, with a target of US\$9 billion for offshore equipment. Achieving this goal, given the current global development situation of offshore equipment, is clearly unrealistic.
Industry insiders say that even though they haven't received any new offshore equipment orders yet, they are still waiting and watching because offshore equipment orders are still profitable.
