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Hyundai Heavy May Win Orders as Gorgon Wins Approval

Posted on August 28, 2009

Hyundai Heavy Industries Co. and its rivals may end an eight-month dry spell with a slew of new orders after Australia approved the US$42 billion Gorgon liquefied natural gas project. Hyundai Heavy, Daewoo Shipbuilding & Marine Engineering Co. and Samsung Heavy Industries Co. have bid for Gorgon contracts that may be worth as much as US$6 billion, said Lee Sang Hwa, an analyst at Hyundai Securities Co., which isn’t affiliated with Hyundai Heavy. Gorgon partners Chevron Corp., Royal Dutch Shell Plc and Exxon Mobil Corp. may award orders as early as next month for the project off the Western Australian coast, Lee said.

Oil companies including Chevron and Petroleo Brasileiro SA are venturing into deeper waters to seek reserves, increasing the need for drilling rigs and production platforms. The offshore contracts may help the South Korean shipyards recover from their worst year for new contracts since the 1970s. “More resources must be explored and produced in uncharted areas and that means more equipment will be needed to make it possible,” said Choi In Ho, who helps manage $4 billion in assets at UBS Hana Asset Management Co. including Hyundai Heavy shares, in Seoul.

The Australian government recently gave environmental clearance to the Gorgon project after setting 28 additional conditions. Gorgon, which is approximately 80 miles northwest of Western Australia's coast, is the largest gas field discovered in Australia with an estimated 40 trillion cubic feet of resources together with other fields in the area.

Korean shipyards said they submitted bids in early 2009 for the Gorgon gas facilities. Gorgon is expected to make its first shipments from the project in 2014.

For more information: www.gorgon.com.au

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