Tens of billions of offshore engineering orders take effect! This "strongest shipyard" lives up to its reputation.

2024-07-01 09:00

South Korea's Samsung Heavy Industries' multi-billion dollar FLNG order has officially become effective, solidifying its leading position in the offshore engineering sector as the world's "strongest shipyard" for FLNG construction.

Recently, Canadian oil and gas company Pembina Pipeline and British Columbia's Haisla Nation jointly announced a Final Investment Decision (FID) for the construction of a floating liquefied natural gas (FLNG) vessel with an annual capacity of 3.3 million tons for the Cedar LNG project.

This FLNG will be jointly built by Samsung Heavy Industries and the American engineering firm Black & Veatch (B&V). Samsung Heavy Industries will be responsible for the FLNG's hull, LNG containment system, and upper module integration, with an order value of approximately US$1.5 billion (approximately RMB 10.899 billion).

The Cedar LNG project is an LNG project jointly invested by Pembina Pipeline and the Haisla Nation, with an estimated total cost of approximately US$4 billion (approximately RMB 29.065 billion), scheduled to commence operations in 2028. The project's FLNG will be deployed in the Montney shale gas field in northeastern British Columbia.

This will be the world's first FLNG project powered by hydropower. According to reports, the FLNG will be driven by renewable energy provided by BC Hydro, making it one of the lowest-emission LNG facilities globally.

As early as last November, Pembina Pipeline and the Haisla Nation had already signed a Heads of Agreement (HOA) with Samsung Heavy Industries and Black & Veatch for one FLNG vessel, securing the necessary shipyard capacity for FLNG construction to meet the target commercial operation date requirements of the Cedar LNG project.

In January this year, Samsung Heavy Industries announced that its consortium with Black & Veatch had signed an EPC (Engineering, Procurement, and Construction) contract for this FLNG. However, at the time, Samsung Heavy Industries stated that the contract was conditional and would only become effective upon the ordering party's final investment decision.

Now, with the Canadian partner's final investment decision, Samsung Heavy Industries' FLNG order has finally become officially effective. Including the latest order, Samsung Heavy Industries' current FLNG order backlog has increased to 2 vessels. In 2022, Samsung Heavy Industries, in cooperation with Japanese engineering firm JGC Corporation, secured the construction contract for Malaysia's Petronas' third FLNG vessel, the "ZFLNG," which is scheduled for delivery in 2027.

It is understood that Samsung Heavy Industries is the leading company with unique competitiveness in the new-generation FLNG market. An FLNG is a mobile, composite offshore facility that produces, refines, stores, and loads/unloads LNG in a floating state. As a production unit from drilling to liquefaction, it eliminates the need for land-based liquefaction storage facilities or subsea pipelines, thus offering the advantage of protecting marine ecosystems. It is reported that major global LNG developers are actively discussing new FLNG investment projects.

To date, a total of only 10 new FLNG orders have been placed globally. Samsung Heavy Industries has secured 5 of these, with Wison Clean Energy receiving 3, Daewoo Shipbuilding 1, and an anonymous shipyard 1.

As of now, Samsung Heavy Industries has successfully delivered 3 large FLNGs, including Shell's US$3.6 billion Prelude FLNG completed in June 2017, Malaysia's Petronas' US$1.5 billion "PFLNG DUA" FLNG completed in February 2020, and Mozambique's US$2.54 billion "Coral-Sul" FLNG delivered in November 2021, cementing its reputation as the "world's strongest in FLNG."

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