South Korea’s Daewoo Shipbuilding & Marine Engineering has cancelled the second of three liquefied natural gas carriers ordered a couple of years ago by Russia’s Sovcomflot, after the client failed to make an interim payment by the designated date as sanctions continue to bite.
“As the shipowner did not pay the shipbuilding price for one LNG carrier within the due date, the company notified the contract termination. The contract has conditions that the shipowner must fulfil and, if the conditions are not met, the contract may be cancelled,” Daewoo said.
Sovcomflot ordered the three Arc7 LNG carriers, destined to serve the Arctic LNG 2 project, from Daewoo in October 2020. In mid-May, the shipyard cancelled the first of the trio after a payment was missed.
Daewoo’s original three-vessel contract with Sovcomflot was worth 1.137 trillion won ($875 million in today’s money) but this was revised down to 675.8 billion won after it cancelled the first carrier and then further reduced to 337.9 billion won after the shipyard axed the second.
The shipbuilder reportedly said the third LNG carrier could also suffer the same fate if payments are not made before their due date.
Daewoo is also constructing three newbuilding Arc7 LNG carriers for Japan’s Mitsui OSK Lines.
All six of these vessels, which were scheduled for delivery next year, had secured 30-year time charters for the Arctic LNG 2, Upstream’s sister publication TradeWinds reported.
South Korean offshore and marine contractors Samsung Heavy Industries and Hyundai Heavy Industries are also building LNG carriers for Novatek-operated liquefaction projects in Russia.