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Chinese Shipbuilders Setting Their Sights on Korean Drillship

Korean Drillship,Chinese shipbuilders
A drilling company of the US is in the process of negotiating the construction of two large drillships with CMHI, a shipbuilding and offshore engineering company of China

The Chinese shipbuilding industry has its eyes on the drillship market which has been dominated by Korean shipbuilders. As the Korean shipbuilding industry is still reeling from an impact from losing a super-large containership order to China, if the main contract on building a drillship is concluded with a Chinese shipbuilder, it will have a huge negative mid- to long-term impact on the Korean shipbuilding industry.

According to major foreign news wires on September 22, Diamond Offshore, a drilling company of the US, is in the process of negotiating the construction of two large drillships with CMHI, a shipbuilding and offshore engineering company of China. The project was initiated when US oil major Chevron announced that it would charter a drillship. Diamond Offshore is one of multiple shipping companies that contacted Chevron.

Diamond Offshore said that the company contacted Korean and European shipyards for the construction of the drillship. But the company finally chose China because of support from the Chinese government and Chinese financial institutions. Korean shipbuilders proposed a high price for a deep-sea large-scale drillship demanded by Diamond Offshore, which helped put an end to the negotiation.

“In fact, it is not clear whether the negotiation will lead to signing a contract,” a Korean shipyard official said. “If it is successfully completed, the Chinese shipbuilding industry will become a threat to the Korea shipbuilding industry in the long term.”

In Korea, only three shipbuilders — Hyundai Heavy Industries, Daewoo Shipbuilding & Marine Engineering, and Samsung Heavy Industries — are now able to build a drillship. STX Offshore & Shipbuilding built a drillship before, but it is uncertain whether or not STX Offshore & Shipbuilding is able to do that at the moment. Except for Korean companies, Singapore’s Keppel and Semcorp Marine can build drillships.

Chinese shipbuilders have also built several small drillships. However, they do not have enough technological competitiveness in building deep-sea drillships currently under discussion.

Recently, a Chinese shipbuilder landed a super large containership order from France’s CMA CGM by outclassing Hyundai Heavy Industries. Chinese shipbuilders which had been building bulk carriers and small container ships only have risen to a level of building high value-added vessels which have been an exclusive business area of Korea’s shipbuilding industry, closely trailing Korean shipbuilders.

The Original Posted by Jung Min-hee/Business Korea