March 16, 2000 in Social Responsibility News

SHI Met a Surge of Orders for Construction of Offshore Structures

Samsung Heavy Industries has recently signed a contract for a 640-million-dollar project made jointly by Malaysia and Thailand, for which Samsung had made a consortium with European developers. This development project for an offshore gas plant is known to be the largest in Asia for a single project for ocean development. The order for the development project, for which Samsung is to build gas production facility, was given jointly by MTJA (Malaysia-Thailand Joint Authority) and CTOC (Carigali-Trition Operating Company), a company contracted to produce gas from the plant. The plant will be located in Cakerawala Gas Field, 150 km northeast from Malaysia and 270 km southeast from Thailand, and produce natural gas and condensate from the sea 60 meters deep from July of 2000 onwards. In this construction project worth of $ 640 million in total, Samsung, as a main contractor, is to take charge of building the plant's core facilities worth of $352 million, 55% of the total, which include gas production facility ($297 million), condensate storage facility ($35 million) and residential facilities ($20 million). The rest of the work such as building small-scale production facilities and laying submarine pipelines, worth $ 290 million in total, will be carried out by Technip S.A in France and Saipem S.P.A in Italy, who participated in the consortium led by Samsung. Considered as one of the most successful case of oil exploration in the Southeast Asia, Cakerawala Gas Field is a multi-national offshore gas field that has been developed jointly by Malaysia and Thailand. The amount of natural gas deposits in this huge gas field is estimated to be about as much as 9 trillion square feet. Experts estimate that as much as 400 million square feet of natural gas will be produced a day for 25 years, while the storage capacity of gas condensate will be 570,000 barrels. A source from Samsung said, the price of natural gas is usually 1-2 dollars higher than oil per barrel, and gas price has recently soared up as well as oil price. That's why we were able to get the contract much earlier than expected as their payability was greatly improved. As Asian economy is recovering fast from the recent financial crisis, he added, demands for natural gas are expected to grow rapidly and we believe that there will be more orders, for example, for construction of production plants and LNG tankers. The source from Samsung also said that the recent contract was for construction of facilities that should combine a high level of shipbuilding and plant construction technolgy including FSO (Floating Storage Offloading). The proven track record of Samsung in this area, he continued, and its recent performance in construction of large-sized ocean plants and the successful delivery of a drill ship played a decisive role in signing the contract. With the latest contract, Samsung Heavy Industries has received $1.75 billion worth of orders this year alone, securing two years of work for the company. Samsung's plan in the near future is to concentrate its ability on having orders for building value-added products such as cruise liners and other vessels for special use.


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