DSME Eyeing $1.1 Billion Submarine Deal

SEOUL (Dow Jones)–Daewoo Shipbuilding & Marine Engineering Co. (042660.SE) said Monday it is talking with the Indonesian government about the possible sale of KRW1.2 trillion ($1.1 billion) worth of submarines to the Southeast Asian country, in what could be South Korea’s biggest export of military equipment.

“We expect the talks to lead to a contract as we have a record of repairing two submarines for the Indonesian navy,” a Daewoo Shipbuilding spokesman said, adding the company would be the first South Korean shipbuilder to export submarines.

The two sides aim to sign a deal by the end of November following negotiations on technology and contract terms, the company said in a statement.

A deal with Indonesia would give Daewoo Shipbuilding access to other markets in Southeast Asia, where governments are stepping up efforts to build up their navies, said the statement.

Daewoo, the world’s No. 2 shipbuilder by order backlog of commercial ships, plans to build three submarines, weighing 1,400 tons each, at its Okpo, Geojedo-based shipyard for Indonesia if it wins the order, the spokesman said.

-By Kyong-Ae Choi, Dow Jones Newswires