Hanwha Ocean Sets Sights on Record-Breaking LNG Carrier Production in Strategic Maritime Overhaul

South Korean Shipyard Aims for Unprecedented LNG Carrier Delivery Records as Part of Visionary Expansion Plan

South Korea’s Hanwha Ocean is undergoing a strategic overhaul of its production capabilities with a specific focus on achieving unprecedented delivery records for LNG (Liquefied Natural Gas) carriers. These changes are integral to the long-term vision of the new owners and management at the helm of the former Daewoo Shipbuilding & Marine Engineering (DSME), aimed at bolstering profitability in the realm of commercial shipping, while also actively pursuing contracts from various naval entities.

In its vision for 2024, the shipyard has set an ambitious target of delivering 22 LNG carriers, which would shatter existing annual delivery records within this sector. Notably, LNG carriers represent the highest-value vessels produced by the shipyard, and the management envisions further growth by achieving 24 LNG carrier deliveries in 2025. To put this into perspective, DSME’s prior record in 2018 stood at 19 LNG carriers delivered.

Hanwha Ocean proudly proclaims its first dock to be the world’s largest, dedicated to new ship construction, measuring a colossal 1,739 feet in length and 430 feet in width. DSME, the precursor company, harnessed the capabilities of this expansive dock to construct a wide array of vessels. To underscore the magnitude of this accomplishment, the company emphasizes that it is currently in the process of simultaneously building four LNG carriers in the dock, with plans for their coordinated launch in the near future.

However, there is a recent hiccup in the otherwise impressive trajectory of Hanwha Ocean. In an October 30th stock exchange filing, the company disclosed that it is presently facing delays on an order placed in 2021, necessitating a reset of the contract date to March 15, 2024. While the specific reasons behind this reset remain undisclosed, it is worth noting that DSME had previously warned of production schedule disruptions due to a 51-day strike at the yard in 2022, coupled with additional slowdowns caused by the recapitalization process in late 2022. Hanwha Ocean completed its investment in DSME in May 2023.

Looking forward, Hanwha Ocean is poised to capitalize on the potential of its second dock for building LNG carriers, a move scheduled to commence in the upcoming year. By optimizing the utilization of both docks and concentrating on the LNG carrier segment, they aim to scale up their output in this category, consequently contributing to the company’s financial performance.

As of the end of the third quarter, Hanwha Ocean boasts a backlog in its order book that guarantees three years of steady work. Notably, they have orders for an impressive 65 LNG carriers out of a total of 99 vessels. Furthermore, the management reports an impending substantial order of LNG carriers expected from QatarEnergy, in line with the company’s extensive slot reservations placed with South Korea’s top three yards in 2020.

Hanwha Ocean remains upbeat about the prospects of its new shipbuilding venture, buoyed by the achievement of the former DSME’s first operating profit in 12 quarters during the most recent quarter. This marked a significant turnaround, considering DSME had been grappling with mounting losses since the fourth quarter of 2020. In the most recent quarter, Hanwha Ocean reported sales amounting to $1.4 billion, a robust performance that culminated in an operating profit of $55 million.

With a forward-looking approach, the company envisions augmented profitability through its shipbuilding strategy, with a specific focus on expanding LNG production. Furthermore, Hanwha Ocean is actively exploring opportunities for naval shipbuilding, all while investing in cutting-edge technologies to shape the future of ship design and enhance their production capabilities. This strategic outlook positions Hanwha Ocean as a formidable player in the maritime industry, poised to set new benchmarks and drive innovation in the construction of LNG carriers.

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