Daewoo Shipbuilding Cancels $514M Order, Keeps Deposit for 2 VLCCs and 2 Bulk Carriers

VLCC shipyard DSME block sections shipbuilding
Block sections of a VLCC (Very Large Crude Carrier) waiting to be lifted by a floating crane and set into a graving dock for assembly. Image (c) Rob-in-Transit (Flickr)

SEOUL—Daewoo Shipbuilding & Marine Engineering Co. said Friday it has canceled an order worth 589 billion won ($514 million) from a European client because the customer was unable to make its first scheduled payment.

The cancellation is the first this year among South Korea’s big shipbuilders. Daewoo declined to name the client but said the continuing financial turmoil in Europe may have been the cause, raising concerns more could follow.

The client paid a deposit in June 2008 when it signed a contract for construction of two very large crude oil carriers and two bulk carriers, a Daewoo spokesman said by telephone.

Separately, Daewoo said it is in talks with Brazil’s state-run oil company Petroleo Brasileiro SA, or Petrobras, to cooperate with Brazilian companies to build oil-drilling facilities for the country’s offshore development project.

“The project involves a total 21 of semisubmersible drilling rigs and drill ships, and we aim for a portion of the offshore facilities,” another spokesman said.

The company declined to provide further details on the negotiations.

By Kyong-Ae Choi, Dow Jones Newswires