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International Cooperation Department
Tel.: (+86-21) 65853850-8034
Fax: (+86-21) 65373125
E-mail: ICDept@sisi-smu.org
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International Shipping |
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| Building LNG ships in the US? Shipbuilding giants increase overseas investment |
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Date:2024-06-26 Readers:
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Hanwha Offshore, backed by parent Hanwha Group, will invest KRW180.6bn (US$130m) in a joint venture with Hanwha Aerospace to acquire a 13.7 per cent stake in US LNG developer Next Decade, accelerating the building of an LNG value chain within the US, and plans to build LNG ships at the major US merchant shipbuilder Philly Shipyard, which has just signed a contract to acquire the company. Hanwha plans to build LNG vessels at Philly Shipyard, a major U.S. merchant shipbuilder that has just signed a contract for the acquisition, for transporting LNG exported from the U.S. to Europe.
Hanwha Group recently announced that it will invest 360 billion won ($260 million) to acquire a 13.7 percent stake in U.S.-based LNG developer Next Decade, with Hanwha Aerospace investing 180.6 billion won ($130 million) to acquire a 6.83 percent stake in Next Decade and Hanwha Marine investing 180.6 billion won ($130 million) to acquire a 6.83 percent stake in Next Decade through the holding company that Hanwha Aerospace set up in the U.S. last November. invested 180.6 billion won (about $130 million) to get a 6.83 per cent stake in Next Decade.
Hanwha Group is said to have taken a stake in Next Decade back in 2018, when Hanwha IMPACT, Hanwha Group's petrochemical subsidiary, acquired a 9.07 per cent stake in Next Decade through its US investment subsidiary HG C NEXT INV.
Thus, after Hanwha Aerospace and Hanwha Marine complete this equity investment, Hanwha Group will acquire 22.73 per cent of Next Decade's shares, making it its largest shareholder.
Next Decade owns the Rio Grande LNG terminal at the Port of Brownsville, Texas. The terminal is one of the world's largest LNG export facilities and is scheduled to produce 27 million tonnes of LNG per year from 2027 onwards.
Since Hanwha Group acquired Hanwha Ocean in May 2023, it has been promoting various equity investments with Hanwha Ocean as the core, with the aim of expanding business synergies.
In November last year, Hanwha Marine announced the establishment of a holding company in the U.S. to promote the acquisition of stakes in overseas shipyards and related ship MRO (repair, maintenance, and operation) companies.
In February, Hanwha IMPACT completed the acquisition of HSD Engine, the world's second-largest marine low-speed engine company, and renamed it Hanwha Engine Co. to enter the marine engine business, which is known as the "heart of ships. and renamed it Hanwha Engine Co. to formally enter the marine engine business, which is known as the "heart of a ship". Through this acquisition, Hanwha's competitiveness in the shipbuilding market is expected to be further enhanced. In particular, HSD Engine Company has already made its mark in the field of environmentally friendly engines, and is therefore expected to add new impetus for Hanwha Marine to seize the dominant position in the shipbuilding market in the future.
On 20 June this year, Hanwha Group announced that it had signed a contract to acquire 100% of the shares of Philly Shipyard, a major U.S. merchant shipbuilder, and that its subsidiaries, Hanwha Systems and Hanwha Marine, would participate in the acquisition with a joint capital of US$100 million, making Philly Shipyard the first U.S. shipyard to be acquired by a Korean company. Hanwha Offshore & Marine is now the first Korean company to acquire a shipyard in the United States. Hanwha Offshore & Marine is now the first Korean company to acquire a shipyard in the United States.
Hanwha Group has been promoting the acquisition of local shipyards in order to transport LNG exported from the U.S. on Hanwha Ocean-built LNG carriers. According to the Jones Act (commonly known as the Jones Act), which was passed by the U.S. government in 1920, only domestically-built ships can be used to transport commodities.
Hanwha Marine is also reportedly planning to participate in the U.S. warship MRO business, which amounts to 20 trillion won ($14.4 billion). The Jones Act also applies to the MRO business of warships in the United States.
In addition, Hanwha Marine submitted a takeover proposal to Austal, an Australian military shipbuilder, in April this year. Despite Austal's rejection, Hanwha Marine said it would not give up and would continue to pursue the acquisition of Austal, which also said it was "willing to maintain further contact.
According to Korean industry sources, after the joint acquisition of Philly Shipyard with Hanwha Systems, Hanwha Marine and Hanwha Aerospace have joined hands to acquire a 13.7 per cent stake in Next Decade, which will further strengthen its control over overseas LNG, and synergise the synergies among Hanwha's subsidiaries within the Hanwha Group. As a result, LNG vessels built by Hanwha Marine's shipbuilding subsidiary in the U.S. will be able to take on the business of transporting LNG from the U.S. to Europe and other regions, while the Hanwha Group, including Hanwha Marine, is itself the largest shareholder of LNG developer Next Decade, thus realising a win-win situation.
Since the outbreak of the Russia-Ukraine conflict in early 2022, Europe has reportedly increased its LNG imports from the U.S. in an effort to reduce its dependence on Russian-produced LNG, and the U.S. surpassed Qatar as the world's top supplier of LNG in 2023," Hanwha Marine said.
Hanwha Marine said, "This investment to acquire 13.7 per cent of Next Decade's shares is part of an investment to utilise the KRW1.5 trillion raised through a paid-in capital increase after being acquired by Hanwha Group. We decided to make the investment in order to prepare for business expansion opportunities for Next Decade, which owns the Port Rio Grande LNG transfer station, and Hanwha Marine."
https://www.cnss.com.cn/html/sdbd/20240626/353914.html
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