LNG

The European Commission’s antitrust regulator has delivered its interim report and asked for more data on the proposed takeover by one of the world’s main LNG carrier builders, South Korea’s Hyundai Heavy Industries, of its Korean shipbuilding rival, Daewoo Shipbuilding & Marine Engineering.

The decision by the European Union Commission’s competition body has gained more importance after Qatar Petroleum signed the largest LNG shipbuilding agreements in history at the start of June to book berths for more than 100 ships valued at around $20 billion from the three largest South Korean yards.

Hyundai Heavy Industries, DSME and Samsung Heavy Industries are the recipients of the Qatar Petroleum berth bookings.

The EU executive body opened its probe into HHI’s acquisition of DSME when the takeover deal was first announced in March 2019.

“We have received the interim report (from the EC), but we could not reveal its details as the party concerned with the investigation,” said a Korean shipbuilding executive.

He added that the EU antitrust body had asked for more data from the companies and a final decision was now expected by September 2020.

The deal needs regulatory approval from six jurisdictions, the EU, South Korea itself, China, Kazakhstan, Japan and Singapore.

The EU Commission had temporarily suspended its probe in March 2020 because of the Covid-19 pandemic

In March 2019, Hyundai Heavy Industries Group signed a deal to buy a 55.72 percent stake in DSME for US$1.8 billion. If the deal is finally confirmed it would create the world's biggest shipbuilder with a 21 percent share in the global market.

In an attempt to reorganise before acquiring DSME the Hyundai Heavy Industry Group split Hyundai Heavy Industries into two entities, Korea Shipbuilding, a sub-holding company that governs the shipbuilding units in the group, and a reorganized Hyundai Heavy Industries Co.

Korea Shipbuilding & Offshore Engineering (KSOE), the Hyundai Group holding company, now oversees shipbuilding units in the group.

KSOE currently manages the group's three shipbuilding companies, Hyundai Heavy Industries, Hyundai Mipo Dockyard and Hyundai Samho Heavy Industries.

Under the Qatari deal for newbuilds, HHI, DSME and Samsung are reserving a major portion of their LNG ship construction berths for Qatar through to 2027.

The Qataris in May 2020 also signed a deal with Korea’s main shipbuilding rival, China.

They booked slots to build eight 175,000 cubic metres capacity LNG carriers at China’s Hudong–Zhonghua Shipbuilding and options for eight others, giving a possible final order value of around $3Bln.

The Gulf state has now secured around 60 percent of global LNG shipbuilding capacity through to 2027 and will slowly expand its fleet over the next seven or so years as its own production increases.

Qatar’s North Field expansion in the Gulf will raise the nation’s LNG production capacity from 77 million today to 126 million tonnes per annum by 2027.