DSME gets order from Kuwait for five tankers

Korea’s third largest shipbuilder, Daewoo Shipbuilding & Marine Engineering, beat out its rivals to win the first shipbuilding order of 2012.

The company announced yesterday it signed a deal for five super-size oil tankers from the state run Kuwait Oil Tanker Company S.A.K. The five-ship order includes four Very Large Crude Oil Carriers (VLCC) and one Aframax-class product carrier.

The value of the order is $560 million. All of the ships will be built at the company’s dockyard in Geoje, South Gyeongsang, and delivered in 2014.

It’s the first time DSME has received an oil tanker order larger than 300,000 tons in total volume since 2010.

A VLCC measures 333 meters in length and 60 meters in width and has a 317,300-ton capacity. An Afaramax product carrier measures 250 meters in length and 42 meters in width, and has a 110,000-ton capacity.

DSME has cutting-edge, green technology to build these ships including pre-swirl stators (PSS), which cut fuel consumption, and De-VOC devices, which reduce volatile organic compounds. The ships are considered environment-friendly and highly efficient and able to meet toughening environmental standards for vessels.

The Kuwait company is a loyal customer of DSME. It has placed a total of 16 ship orders: five VLCCs in 1992, another four in 2008 and two Aframax product carriers in 2010.

“DSME and KOTC are on the way to establishing a long-term partnership through consistent order placements,” said Nam Sang-tae, president and CEO of DSME. “Considering this deal as a starting point of this year, DSME will actively try to win orders via aggressive overseas marketing strategies.”

DSME said it was the first shipbuilder in Korea and the rest of the world to receive an order in 2012.

“Amid growing difficulties in the global shipbuilding market, triggered by the euro zone crisis, DSME’s order gives the Korean shipbuilding industry encouragement that it could help revitalize the stagnant oil tanker market,” the company said.

According to U.K.-based shipping researcher Clarksons, the global oil tanker market was stagnant last year. There was no order for an oil tanker over 300,000 tons reported since last April.

Last year, there was an excess in global supply of oil tankers, and rental fees dropped significantly.

According to the researcher, oil consumption was estimated to have risen 1.7 percent, while the number of oil tankers shot up 14 percent last year. In short, there were idle ships that had no oil to carry.

“The global market was so dire that we didn’t receive a single order in 2011,” Lee Sang-kyu at DSME said. “Combined with the euro zone crisis, global demand for oil dwindled and there was oversupply of completed VLCCs last year.”

By Song Su-hyun [ssh@joongang,co.kr]