South Korean shipbuilding heavyweights Daewoo Shipbuilding and Marine Engineering, Samsung Heavy Industries and Hyundai Heavy Industries are considering a joint bid for a French engineering company to prevent a Chinese rival from challenging their domination of the global LNG carrier market, according to a report by Reuters that cited sources with direct knowledge of the matter.
The report says that the South Korean trio is mulling over a $1.3 billion (1 million euros) bid for GTT (Gaztransport & Technigaz), a marine engineering company that specializes in systems for storing liquefied natural gas.
GTT’s three major shareholders – GDF Suez, Total, and U.S. private equity fund Hellman & Friedman – are reportedly looking to unload their stakes in the company.
“Should a Chinese firm take over the company, it would be a challenge in the LNG ship market, where Korean players have the upper hand currently,” the report quotes one source as saying.
GTT’s website lists the three shipyards – DSME, SHI and HHI – as the primary shipbuilders with orders for GTT’s LNG carrier containment systems. GTT does have one system on order with China’s Hudong Zhonghua shipyard according to their website.
The companies LNG carrier technology is in use on the LNG carrier Rasheeda, a Q-Max class LNG mega-ship with the capacity for 266,000 CBM. The Rasheeda was built at Samsung Heavy Industries and delivered in 2010.
UPDATE Wednesday, Jan. 11: “We are mulling a joint bid following the advice of the Korea Shipbuilders’ Association because a single bid is too burdensome for any one shipbuilder,” a spokesman for the Ulsan-based Hyundai Heavy shipyard told Dow Jones Newswires on Tuesday.
All of South Korea’s big four shipbuilders currently pay GTT $10 million for each LNG vessel they make because the French company owns the patents for ultra-cold LNG-containment systems used in the ships.
The Korea Shipbuilders’ Association, which represents the companies, also expressed that a major concern is that GTT’s patented technology could be bought by Chinese shipbuilders.
“South Korean shipbuilders have no other option but to join hands in order not to lose the high-end LNG ship market to China given that GTT has core technology,” an official from the association said.