[Ship Building] Korea's No.1 Competitiveness (Ⅳ)

Future of Korean Shipbuilding (1)

As mentioned above, when considering the establishment of Hyundai Heavy Industries in early 1970s as the starting point of Korean modern shipbuilding engineering, it took about 30 years to reach to the similar level with Japanese shipbuilding.

At present, Japan is going through economic stagnancy, not to mention troubled shipbuilding industry, as strong yen continues for a while and young Japanese started to avoid working at shipyards.

However, with steady investment in R&D and attractive wages and benefits packages, Korean shipyards now secure high-end technologies in LNG carrier, offshore plant, etc., and lead global shipbuilding market.

Then, will Korea be able to get the spotlight in the years to come as well? How will it be affected by late runner China's challenge?

Chinese shipbuilding industry has gained superiority in a quantitative perspective (delivery in numerical terms), however, I think it will take longer time for Chinese shipyards to threaten Big3 shipbuilders - Hyundai and Samsung Heavy Industries and Daewoo Shipbuilding & Marine Engineering.

Korean Big3's R&D commitment seems higher than Japanese shipyards during their glory days in the past. For instance, Japanese shipbuilders had developed by gaining competitiveness in oil tanker segment, while Big3 in these days concentrate on containership, LNG carrier, offshore plant, etc., which are not largely related to market ups and downs.

By the way, a majority of those contracted in China is bulker, which is technically simpler than tanker.

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[Ship Building] Sungdong secures RG backing

Korean shipyard Sungdong Shipbuilding & Marine Engineering's creditors have finally agreed to provide refund guarantee (RG) for its 10 livestock carriers won in May of 2012, announced the Export-Import Bank of Korea on July 12.

On the same day, Sungdong has signed a modified contract with the Malaysian owner PBHH for postponing delivery by two months each on the average.

The creditor group plans to provide RG within a couple of weeks.

Also, creditors will proceed with Sungdong's normalization measures set up in the end of 2011, including conversion of investment, capital reduction, etc.

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[Ship Building] COSCO rolls out BCs

The Board of Directors of COSCO Corporation (Singapore) Limited announced that subsidiaries of the Company's 51% owned COSCO Shipyard Group Co., Ltd have made the following deliveries:

1. COSCO (Dalian) Shipyard Co., Ltd has delivered one bulk carrier of 82,000 DWT, "ECOFAITH G.O.", to its European buyer.

2. COSCO (Zhoushan) Shipyard Co., Ltd has delivered one bulk carrier of 57,000 DWT, "ASIAN CHAMPION", to its Asian buyer.

All the delivery documents were signed by and between the COSCO shipyards and the respective buyers in July 2012.

The bulk carrier of 82,000 DWT measures 229 meters in LOA (length of all), 32.26 meters in breadth and 20.25 meters in depth.

The bulk carrier of 57,000 DWT measures 189.99 meters in LOA (length of all), 32.26 meters in breadth and 18 meters in depth.

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[Ship Building] Noble fixes 2nd HHI drillship

ZUG, Switzerland, July 12, 2012 - Noble Corporation announced that the Company has entered into a three-year term drilling contract with Anadarko Petroleum Corporation for the Noble Bob Douglas, one of Noble's new ultra-deepwater drillships currently under construction at the Hyundai Heavy Industries Co. Ltd. (HHI) shipyard in Ulsan, Korea.

The drillship, which is being constructed on a fixed price basis, is expected to be utilized for operations primarily in the U.S. Gulf of Mexico.

The Noble Bob Douglas is expected to be delivered in the fourth quarter of 2013.

The contract is expected to commence thereafter following mobilization to an initial operating location and client acceptance.

Revenues to be generated over the three-year term are expected to total approximately $677 million. The contract also provides for an operating cost escalation provision.

The Noble Bob Douglas is one of four ultra-deepwater drillships being constructed for Noble by HHI. All four drillships are based on a Hyundai Gusto P10000 hull design, capable of operations in water depths of up to 12,000 feet and offering a variable deck load of 20,000 metric tons.

With the award of this contract for the Noble Bob Douglas, two of the Company's four ultra-deepwater drillships under construction at HHI are now under contract.

The remaining two uncontracted drillships are scheduled to be delivered from the shipyard in 2014.

The Noble Bob Douglas will be delivered fully equipped to operate in up to 10,000 feet of water while offering DP-3 station keeping, two complete six-ram BOP systems, multiple parallel activity features that improve overall well construction efficiencies and accommodations for up to 210 personnel.

The rig will also be equipped with a 165-ton heave compensated construction crane to facilitate deployment of subsea production equipment, providing another level of efficiency during field development programs.

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[Ship Building] OSD secures PSV design

Offshore Ship Designers UK division OSD-IMT has been awarded a contract to supply the design for a modified version of its IMT 982 Platform Supply Vessel to be built at the new shipyard facility of Honghua Offshore Oil & Gas Equipment in Jiangsu, China.

The contract is the result of increased marketing and technical collaboration between OSD group companies. It is contracted through OSD-Shanghai, with OSD-Singapore providing design engineering technical support to OSD Shanghai for design modification. The basic class-approved design documentation and design licence is provided by OSD-IMT Ltd, Montrose, UK.

The 83.2-metre long PSV has a deck area of 900 m² and can carry 1330 m³ of fuel oil, 800 m³ of potable fresh water, 980 m³ of liquid mud/brine, 1350 m³ of drill water/water ballast, 265 m³ of dry bulk and 170 m³ of base oil. It has a maximum load deadweight of about 4,000 tonnes at 6.0 m draught.

A diesel electric propulsion system is fitted comprising four main diesel generators, 2 x 1900 kW frequency controlled electric motor-driven azimuth thrusters for main propulsion and 2 x 800 kW frequency controlled electric motor driven tunnel thrusters fitted forward. The vessel is classed with Lloyds Register of Shipping and is fitted with a DP2 system. It has accommodation for a crew of 28 persons and has a trial speed of 14.0 knots.

Meanwhile, Swire Pacific Offshore (SPO) has confirmed an order with Universal Shipbuilding Corporation (USC) in Japan for 6 high-specification IMT 984 3700 DWT PSVs designed by OSD-IMT, with options for a further 4 vessels. The vessels will be built in USC's Keihin Shipyard and delivered progressively from third-quarter 2014. These orders follow on from the one placed in late 2011 for four OSD-IMT-designed IMT 997 5000 DWT PSVs at USC's Maizuru Shipyard and 4 IMT 997 PSVs at the EISA Shipyard, Rio de Janeiro, Brasil.

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[Marine] Air-lubrication enhance efficiency

Nippon Yusen Kaisha (NYK) and two NYK group companies, Monohakobi Technology Institute (MTI) and NYK-Hinode Line, have confirmed a 6% reduction in carbon dioxide (CO2) emissions on its air-lubrication technology tested on containerships.

The results were confirmed during actual sea passage on two of the group's containerships Yamato and Yamatai.

The results from the two vessels were obtained after two years of testing under various operating conditions, according to NYK.

“Compared to the 10% reduction measured during sea trials, the reduction of CO2 emissions was confirmed to average 6% under various weather and sea conditions,” the Japanese said.

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[Marine] ABB wins $80m Ichthys orders

Zurich, Switzerland, July 12, 2012 - ABB, the leading power and automation technology group, has won orders worth around $80 million to supply power technologies and medium-voltage drive systems for the new Ichthys liquefied natural gas (LNG) project's processing plant near Darwin, Australia.

The equipment will power the plant and control the compressors that liquefy the gas. Approximately half of the order value was booked at the end of the first quarter with follow through orders in the second quarter.

The Ichthys LNG project is a joint venture between INPEX (operator), Total, Tokyo Gas, Osaka Gas and Toho Gas and represents the second largest oil and gas development in Australia's history.

Gas from the Ichthys Field, in the Browse Basin approximately 200 kilometers (km) off the coast of Western Australia, will undergo preliminary processing offshore to remove water and extract condensate. The gas will then be exported to onshore processing facilities in Darwin via an 889 km subsea pipeline. The Ichthys LNG project is expected to produce 8.4 million tonnes of LNG and 1.6 million tonnes of LPG per annum, along with approximately 100,000 barrels of condensate per day at peak.

ABB's equipment will facilitate the main power supply for the onshore dual train LNG processing facility and control the compressors that liquefy the gas collected from the offshore field. ABB will design and deliver a power supply solution for the LNG processing facility, including supply of key equipment such as power and distribution transformers, medium-voltage switchgear, low-voltage motor control centers (MCC), and a power distribution monitoring and control system.

"ABB technologies will facilitate reliable and efficient power supply for this new and significant LNG facility," said Bernhard Jucker Head of ABB's Power Products division. "Our domain expertise, comprehensive portfolio and proven track record make ABB a trusted oil and gas sector partner."

Six medium-voltage variable-speed drive systems, including synchronous 2-pole motors rated at 20 megawatt (MW) and 3,600 revolutions per minute (rpm), and two medium-voltage variable-speed drive systems, including induction motors, rated 3.2 MW will be installed to help process the LNG, together with converter transformers.

"ABB has a strong track record for this type of application in the oil and gas industry, where reliability and safety are of paramount importance. We not only offer reliable products, but also a full range of engineering and support services to meet the demanding requirements of this industry," said Ulrich Spiesshofer, head of ABB's Discrete Automation and Motion division.

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[Equipment] MHI licenses Deck Machinery

Mitsubishi Heavy Industries, Ltd. (MHI) has signed an agreement with Imabari Shipbuilding Co., Ltd. in Imabari, Ehime Prefecture, Japan, under which MHI licenses production and marketing of deck machinery.

Through licensing, MHI aims to expand market share of deck machinery based on the company's technology and, at the same time, respond to requests from Imabari, which looks to enhance business through deck machinery production. The production of licensed machinery is scheduled to be started in April 2013.

Imabari Shipbuilding is the Japan's largest shipbuilder, with the highest new ship building tonnage and ship sales, and builds various types of ship. The licensed deck machineries consist of various configuration types and are capable for use in all ships. Hydraulic pumps and motors, which drive machines, will be supplied by MHI. Imabari plans to build the deck machinery at the shop in Dalian Imaoka Shipbuilding Co., Ltd., a ship block manufacture plant that Imabari has established in Dalian, China.

Deck machinery consists of anchor windlasses, which are used for anchoring and anchor hoisting, and mooring winches, which are used to moor a vessel to a pier or berthing facilities. MHI manufactured its first deck machinery in 1962. The company's deck machinery has built up a solid delivery track record and has won high reputation from customers for their high reliability, and durability.

MHI has licensed deck crane technologies to Jiangsu Masada Heavy Industries Co., Ltd. in Nantong, Jiangsu Province, in 2008, and granted production and marketing of steering gears and deck machinery in the spring of this year. The agreement with Imabari was concluded succeedingly. MHI will further strengthen its aggressive marketing activities for the company's marine machinery, including deck machinery.

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[Equipment] MHI licenses Deck Machinery

Mitsubishi Heavy Industries, Ltd. (MHI) has signed an agreement with Imabari Shipbuilding Co., Ltd. in Imabari, Ehime Prefecture, Japan, under which MHI licenses production and marketing of deck machinery.

Through licensing, MHI aims to expand market share of deck machinery based on the company's technology and, at the same time, respond to requests from Imabari, which looks to enhance business through deck machinery production. The production of licensed machinery is scheduled to be started in April 2013.

Imabari Shipbuilding is the Japan's largest shipbuilder, with the highest new ship building tonnage and ship sales, and builds various types of ship. The licensed deck machineries consist of various configuration types and are capable for use in all ships. Hydraulic pumps and motors, which drive machines, will be supplied by MHI. Imabari plans to build the deck machinery at the shop in Dalian Imaoka Shipbuilding Co., Ltd., a ship block manufacture plant that Imabari has established in Dalian, China.

Deck machinery consists of anchor windlasses, which are used for anchoring and anchor hoisting, and mooring winches, which are used to moor a vessel to a pier or berthing facilities. MHI manufactured its first deck machinery in 1962. The company's deck machinery has built up a solid delivery track record and has won high reputation from customers for their high reliability, and durability.

MHI has licensed deck crane technologies to Jiangsu Masada Heavy Industries Co., Ltd. in Nantong, Jiangsu Province, in 2008, and granted production and marketing of steering gears and deck machinery in the spring of this year. The agreement with Imabari was concluded succeedingly. MHI will further strengthen its aggressive marketing activities for the company's marine machinery, including deck machinery.

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[Equipment] Chinese orders MacGregor equip

A Chinese state-owned shipyard has ordered MacGregor variable frequency drive cranes and folding-type hatch covers for Greek bulk shipping operator Ariston Navigation's six new generation 35,000 dwt bulkers. The contract is booked into Cargotec's second quarter order intake. Deliveries are scheduled for 2013 and 2014.

Ariston Navigation Corporation, part of the family-owned Xylas Group, has ordered a series of 35,000 dwt handysize Seastallion vessels from the shipyard. New ships have been designed with a versatile specification and are planned for worldwide trade. Each will feature folding-type MacGregor hatch covers and four fully electrically-operated variable frequency drive (VFD) MacGregor wire-luffing bulk-handling deck cranes, each with an SWL of 30.5 tonnes at a maximum outreach of 26m.

Ariston Navigation believes that the early involvement of key suppliers is important for delivering vessels fully optimised for their designed functions. "We involved Cargotec as well as all suppliers of critical equipment at the very early stages of our project," said John Xylas, CEO of Ariston Navigation.

The company also sees significant advantages in sourcing major items from a single supplier. "Absolutely: the lower the number of makers, the more efficient the communication in the project," John Xylas continued.

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[Marine] COSCO wins Sevan-style FPSO

Following more than a year of front end engineering and development work, Sevan Marine is pleased to announce that it has been chosen by Dana Petroleum for the Western Isles development project.

The Western Isles project consists of two oil fields called Harris and Barra in the UK Northern North Sea and east of Shetland.

Carl Lieungh, Sevan Marine's CEO said: "We are extremely pleased that our FPSO technology has been chosen by Dana for the Western Isles development project. We have already enjoyed working with Dana during front end engineering and development, and we are looking forward to continuing to provide services to Dana during the execution of the EPC contract."

The development is expected to produce more than 40,000 barrels of oil equivalent each day and the project is expected to receive full approval from the UK Government towards the end of 2012, with first oil production expected in 2015.

Sevan Marine and Dana Petroleum have negotiated two agreements, one Technology License Agreement whereby Dana pays a license fee to Sevan for the right to use the proprietary Sevan Technology, and one Service Agreement under which Sevan will provide technical and administrative resources to Dana during the project.

The FPSO is reportedly to be built at COSCO Shipyard Group in China.
Sevan Marine ASA is specializing in design, engineering and project execution of floating units for offshore applications, with a main focus on Floating Production, Storage and Offloading units (FPSOs).

The Western Isles Project (Dana 65% and Cieco 35%) will develop two discovered oil fields called Harris and Barra in the Northern North Sea, 160km east of the Shetlands and 12km west of Tern field. It involves a subsea development of at least five production and four water injection wells tied back to a newbuild floating production, storage and offloading vessel (FPSO) with oil export using shuttle tankers.

UK Government sanction is expected towards the end of 2012 followed by placement of the major contracts. Drilling is expected to begin 2013 with subsea installation in summer 2014 and FPSO installation summer 2015.

Paul Griffin, Dana’s UK Managing Director said: “Western Isles is a very important project for Dana and a key part of our strategy to double daily production to more than 100,000 barrels of oil equivalent by 2016. Work on the detailed engineering design will begin immediately and the project is expected to receive full approval from the UK Government towards the end of 2012, with first oil production expected in 2015.”

Charles Hendry, UK Minister of State for Energy and Climate Change said: “This is great news for UK energy security and UK jobs and joins a growing list of major North Sea projects announced recently. Dana’s procurement strategy will create opportunities for UK companies to compete for key parts of the project. I’m delighted that Dana has demonstrated its commitment to the UK North Sea and we look forward to receiving the final development proposals.”

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[Marine] Energy-related newbuilding lasts

Although investment in newbuilding commercial ship is still stagnant, there will be steady orderings seen in energy-related ship and offshore plant market.

Analyst Park Min of Korea Investment & Securities said on July 12, "With continued global financial crisis, tight ship financing market maintains. As such, newbuilding contract declines and owners having gained bargaining power ask for terms that are unfavorable to shipyards, regarding prices, payment structure, etc."

Park added, "Due to structural slump of shipping market, ship financing condition is getting tightened since global financial crisis in 2008. The period term of the loan has decreased to five to seven years from 12-15 years and loan to value ratio has been lowered to 60% from 90%, which means owners need more funds in the initial stage when placing an order."

Park said, "Nevertheless, ship financing majored banks will maintain to prefer offshore plant, drillship, LNG carrier market. Also, dependency on non-traditional direct financing (equity and bond) is expected to rise."

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[Marine] China expands rig orders

China is emerging fast as a strong competitor to the traditional offshore rig-building powerhouses of Singapore and Korea as shipyards such as COSCO, CIMC Raffles, Shanghai Shipyard, DSIC, etc. fight for a bigger market share in a deep-water exploration boom as well as shallow offshore.

China started making jack-up rigs for shallow-water drilling and semi-submersibles for deep-water operations about seven years ago.

In that short span of time, industry data shows it managed to secure a fifth of the $72 billion orders placed, tempting customers with aggressive pricing, Reuters reported.

China also topped the annual orders lists at least twice during that period. In 2009, it outpaced Singapore, traditionally the dominant producer of jack-ups, and in 2006 and 2011, ousted Korea on semi-subs.

"Over time there is no reason why Chinese yards – the good yards – could not be competitive internationally," Scott Kerr, chief executive officer of Norwegian oil service company Sevan Drilling, told Reuters.

Sevan has taken delivery of two ultra-deepwater rigs worth more than $1 billion from COSCO and has ordered another two such rigs from the shipbuilder for delivery in 2013 and 2014.

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