30 September 2014, News Wires – Samsung Heavy Industries of South Korea is revamping its manufacturing operations and launching its first overseas facility so it can focus its domestic work on upstream oil and gas projects, according to a report.
The Seoul-based company expects to spend around 1 trillion won ($950 million) on the new facility by 2017, chief financial officer Chun Tae Heung told Bloomberg. The new plant, to be built likely somewhere in South-East Asia, would construct bulk ships, tankers and smaller container vessels.
This will allow Samsung to build drilling rigs and production vessels at home, and to trim costs of producing lower-margin vessels by building them overseas, Bloomberg said.
“We believe there will be demand for offshore oil and gas projects in the long term,” Chun told the news wire. “We want to make room at our shipyard in Korea to focus more on offshore and building higher-value ships.”
Plans for the new yard are expected to be finalised as early as this year.
Samsung expects demand for upstream vessels to increase as oil companies venture into deeper and harsher areas.
The shipbuilder expects to win at least $15 billion of new orders in 2015, Chun told Bloomberg. The company has won $5.5 billion in orders so far this year, more than half of which are for offshore products.
It is currently building a floating production facility in Geoje, South Korea, for Shell’s Prelude field off Australia, trumpeted as the world’s biggest such vessel.
“We will from now on win offshore projects that are profitable,” Chun said. “We have learned from earlier projects to be more cost effective.”
