Shipbuilders’ losses are increasing because of russia

Losses at South Korean shipbuilding companies are mounting as russia cancels orders en masse due to sanctions.

The Korean shipyard Daewoo Shipbuilding & Marine Engineering last week terminated the order of Sovcomflot for the construction of three ice-breaking gas carriers. The value of the contract was 850 million dollars, reports Pulse.

“If the shipowner has financial problems, we can adjust the agreement by mutual agreement, but in this case the source of receiving any funds is blocked, so we had to terminate the contract,” said a representative of Daewoo Shipbuilding. “We are looking for a new owner to take over the ship.”

In July, Hyundai Samho Heavy Industries also terminated the agreement with Sovcomflot. The company was supposed to build three gas carriers for $550 million. Now these vessels have been resold to new owners. A representative of Hyundai Heavy Industries Group stated that at the moment the company has no unfulfilled orders with russian companies.

In general, the losses of Korean shipyards are estimated at 6 billion dollars. Samsung Heavy Industries suffered the biggest losses — $5.1 billion. In second place is Daewoo Shipbuilding with $770 million.

Samsung Heavy is involved in russia’s Arctic LNG 2 project, a gas field on the Hydan Peninsula in Siberia. By 2025, russia hoped to produce 19.8 million tons of LNG annually. The orders that Daewoo Shipbuilding recently canceled were related to this particular project.

Samsung Heavy is currently working on three of the 20 vessels on order. The gas carrier contract is worth $860 million, of which only $500 million has been paid.