Samsung Heavy wins offshore deal

Samsung Heavy Industries said Thursday that it has won a $1.27 billion deal to build an offshore facility, marking the first mega deal of the year for Korean shipbuilders struggling to bring in new orders.

Under the deal with BP, Samsung Heavy will build a floating production unit by August 2020.

The semi-submersible platform will be used for BP’s field development project, called “Mad Dog II,” in the Gulf of Mexico.

The facility will be able to produce 110,000 barrels of crude oil, according to Samsung Heavy.

Samsung Heavy’s offshore facility deal marks the first of its kind in 18 months. Last year, no offshore facility deals were made around the globe due to low oil prices. The shipbuilder said it is likely to win an additional offshore facility deal due to rising oil prices.

Korean shipbuilders have been under serious financial strain since the 2008 global economic crisis, which sent new orders tumbling amid a glut of vessels and stiffer competition from Chinese rivals.

Feeling the pinch of an industry-wide slump and increased costs, the country’s big three shipbuilders - Hyundai Heavy Industries, Daewoo Shipbuilding & Marine Engineering and Samsung Heavy - logged a combined operating loss of 8.5 trillion won ($7.2 billion) in 2015, marking the first time they suffered losses on an annual basis.

Last year, their bottom lines improved on the back of cost-cutting measures, but still suffered a sharp drop in new orders. YONHAP