By Kyunghee Park,
Oct. 20 (Bloomberg) — Samsung Engineering Co., South Korea’s largest engineering company, expects to win its first liquefied natural gas project contract that could be worth more than $1 billion.
Samsung Engineering will initially get a $5 million contract later this month to design a terminal in Brownsville for Texas LNG LLC to export gas, Edward Kang, a spokesman at the Seoul-based company said today, confirming a statement on Texas LNG’s website. Under the agreement, the Samsung Group company will also build the facility to be completed in 2019, he said.
“This project will enable us to crack into a market that had only few players,” Kang said. “This is a high-end market we have been trying to get into for a very long time.”
Samsung Engineering will merge with Samsung Heavy Industries Co., the world’s third-largest shipyard, by December to effectively compete with companies such as Technip SA and Saipem SpA. The combination will boost their move to win more orders to build LNG ships and develop energy projects.
Samsung Engineering will take a minority stake in the LNG project and design the terminal, Texas LNG said in a statement on its website dated yesterday.
Shares of Samsung Engineering rose 6.1 percent, the most since Sept. 1, to 59,100 won at the close in Seoul trading. Samsung Heavy climbed 6.4 percent.
The terminal in Brownsville, Texas will have a capacity to produce as much as 2 million tons of LNG a year sourced from natural gas system in the U.S. for exports in 2019. Samsung Engineering plans to build blocks at Samsung Heavy’s facilities and assemble at the site, Kang said.
The merger will help combine Samsung Heavy’s offshore expertise and Samsung Engineering’s project management knowhow to minimize risks of cost overruns, Samsung Heavy’s Chief Financial Officer Chun Tae Heung said last month.
Samsung Heavy plans to set up its first overseas facility to build bulk ships, tankers and smaller container vessels. The company also aims to build modules at the shipyard it plans to build in Southeast Asia to be assembled into factories for Samsung Engineering.
Samsung Engineering posted a net income of 14.5 billion won ($13.7 million)in the third quarter, compared with a loss of 524.3 billion won a year earlier, the company said today. Sales increased 14 percent to 2.21 trillion won.
(c) 2014 Bloomberg.