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Ships sit under construction at the Daewoo Shipbuilding & Marine Engineering Co shipyard in this aerial photograph taken in Geoje, South Korea, on Friday, February 1, 2019. Hyundai Heavy Industries Group and Daewoo Shipbuilding's largest shareholder Korea Development Bank (KDB) signed a conditional MOU under which Hyundai Heavy Industries Co will split into a holding company and an operating company. The holding company will buying KDB's 55.7 per cent stake in Daewoo. (Photo: SeongJoon Cho/Bloomberg)

Qatar signs US$20-B ship deal to boost LNG lead

Ships sit under construction at the Daewoo Shipbuilding & Marine Engineering Co shipyard in this aerial photograph taken in Geoje, South Korea, on Friday, February 1, 2019. Hyundai Heavy Industries Group and Daewoo Shipbuilding's largest shareholder Korea Development Bank (KDB) signed a conditional MOU under which Hyundai Heavy Industries Co will split into a holding company and an operating company. The holding company will buying KDB's 55.7 per cent stake in Daewoo. (Photo: SeongJoon Cho/Bloomberg)

Qatar has signed a deal worth around US$20 billion with South Korean shipbuilders to help cement its position as the world’s largest producer of liquefied natural gas.

The Gulf emirate entered into agreements with Daewoo Shipbuilding & Marine Engineering Co, Hyundai Heavy Industries Co, and Samsung Heavy Industries Co, according to a statement on Monday from State producer Qatar Petroleum (QP). The three firms will reserve a “major portion” of their LNG ship-construction capacity for QP through 2027.

“Qatar is ‘moving full steam ahead’ with the expansion of the North Field, its share of the world’s biggest gas deposit…”

The deal, valued at around 70 billion Qatari rials (US$19.1 billion), could see them build more than 100 LNG vessels for Qatar, QP said.

The shares of Daewoo Shipbuilding and Samsung Heavy soared more than 15 per cent on Tuesday in Seoul.

“We have everything in place to commence the largest LNG-shipbuilding programme in history,” said Saad Al-Kaabi, QP’s chief executive officer and Qatar’s energy minister. “We have secured approximately 60 per cent of the global LNG shipbuilding capacity through 2027.”

Saad Al-Kaabi, and Qatar’s energy minister and chief executive officer of Qatar Petroleum. (Photo: Platts Insights)

QP signed a similar agreement with Hudong-Zhonghua Shipbuilding Group Co, a subsidiary of China State Shipbuilding Corp, in April. It needs a bigger fleet of LNG carriers because of new projects at home and in the US.

Qatar is “moving full steam ahead” with the expansion of the North Field, its share of the world’s biggest gas deposit, Al-Kaabi said. That will raise the country’s annual LNG exports from 77 million tons to 126 million tons by 2027, he said.

QP signed a similar agreement with Hudong-Zhonghua Shipbuilding Group Co, a subsidiary of China State Shipbuilding Corp. (Photo: Splash 247)

READ: Qatar Petroleum’s Cost Cutting Won’t Affect LNG Output, Says CEO

QP will boost output despite cutting overall spending by about 30 per cent, Al-Kaabi said last month. The plan to reduce expenditure comes as the coronavirus pandemic saps demand for LNG and causes prices to spiral toward record lows.

— Bloomberg