Despite the slump in crude oil prices, which may push the oil majors and minors to defer projects, the global shipbuilding giant, Samsung Heavy Industries (SHI) has continued to improve on its technological expertise to maintain its leadership position in the offshore industry.
The company has also improved its expertise in topside design and construction, which are key components of offshore development facilities.
The drop in oil prices following the outbreak of the global COVID-19 pandemic, which eroded demand in the oil market in March 2020, led companies to cut costs to remain competitive.
But even with the uncertainty in the offshore market outlook, SHI has remained undaunted due to the global oil industry’s belief that fluctuations in short-term oil prices do not affect oil projects, given the long-term nature of oil and gas projects.
SHI announced on Monday 23rd November that it has signed a US 2.5 billion deal with a European company to provide ship blocks and other equipment. The deal, the largest order ever the shipyard has clinched will be finalized in December 2025.
The company has continued to wax stronger and stronger with the expectation that the market environment can be turned around when oil prices rise given that projects of oil companies are not dependent on the short term changes in oil prices.
A recent update issued by the Korean company on its technological innovation, showed that it has invested heavily to build more capacity and capability in offshore projects, where companies manufacture, supply, and operate equipment for drilling and producing oil and gas buried on the seabed.
Its main customers are major oil producers and state-owned oil companies in oil-producing countries.
According to the update, SHI has built more Floating Production Storage and Offloading (FPSO) units than any other shipbuilder around the world.
In addition, the report also showed that SHI is recognised by world’s leading oil producers for its accumulated shipbuilding technologies in offshore development facilities.
These facilities include fixed offshore platform, TLP, and floating offshore structure, which require a high level of stability and technology.
With these technological acquisitions, the company said it has effectively demonstrated excellent turnkey-producing abilities.
As a result, it was awarded the order for the world’s largest offshore platform by the SEIC (Sakhalin Energy Investment Company) and the order for the world’s largest Egina FPSO by Total in France.
These major achievements by SHI were game changers in the oil and gas industry.
The Managing Director of Samsung Heavy Industries Nigeria (SHIN) Limited, Mr. Jejin Jeon, attributed the company’s successful bid for the Egina project to the company’s commitment to developing Nigeria’s economy and investing in its workforce.
“Before the Egina project, most maritime construction for Africa’s oil and gas projects took place outside of Africa. Nigeria did not have the capacity to fabricate and integrate an FPSO locally,” Jeon explained.
“A component of our winning bid was its emphasis on meeting the stringent new local content law, which requires foreign investors into Nigeria’s oil and gas sector to involve a high proportion of local workers. In order to achieve this, we invested heavily in training to develop the skills needed to construct the FPSO locally. Many were skeptical as to whether local fabrication would meet international standards, but through rigorous training and health, safety and environmental oversight, the Egina project stands as an example of that local fabrication can be world-class and positions Nigeria as a fabrication hub of Africa,” Jeon added.
The Egina FPSO, which has a total storage capacity of 2.3 million barrels, contributes 10 per cent of Nigeria’s total oil production.
There is no doubt that SHIN’s involvement in the Egina project will help ripple effects far beyond the construction of a single FPSO.
It would be recalled that in 2010, the company unveiled a method of construction combining the upper structure with the lower structure of a drilling facility on the sea while undertaking a project for Gazflot in Russia. SHI is especially pioneering new markets, such as the market for FLNG (Floating Liquefied Natural Gas facility) making LNG produced on the water.
In 2011, SHI received an order to build the world’s first and largest FLNG with an annual production capacity of 3.6 million tonnes from Royal Dutch- Shell and successfully completed the delivery in 2017.
With the successful completion of this project, SHI secured FLNG orders from Petronas of Malaysia and Italy’s ENI, taking the lead in the market of new vessels. SHI had earlier set a goal to win orders for offshore plants worth $2.5 billion in 2020.
To achieve this goal, it made proactive efforts to win orders for offshore facility building projects of which bidding processes were underway, such as Shell Bonga SW Aparo FPSO, Petrobras FPSO and HI-Block Platform.
By winning orders for projects similar to those it successfully executed in the past and making the most use of its experiences in shipbuilding, the company aims to achieve the optimum level of profit and loss as well as minimise risks that hindered it from achieving its goals.
SHI had in 2019, secured an order for one FPSO from Reliance in India, which is worth $1.05 billion.