The South Korean government will build a centre to undertake research and development in the construction of offshore vessels.
Such vessels are the flagship products of the country’s three biggest shipbuilders – Hyundai Heavy Industries, Samsung Heavy Industries, and Daewoo Shipbuilding & Marine Engineering – and the government wants to help the trio to maintain their market position.
A groundbreaking ceremony for the centre was held in Geoje in South Gyeongsang province on 10 July. Among the 300 people at the ceremony was the minister for oceans and fisheries, Yoo Ki-june.
In November 2013, the Ministry of Oceans and Fisheries signed a memorandum of understanding with the province and the centre.
Geoje offered a 235,541 m² plot for the development while the ministry will invest KRW25.2 billion (USD22.3 million) in the construction, which is expected to be completed in February 2017.
The centre’s main task is to improve the global competitiveness of South Korean shipbuilders by developing new technologies to secure core competencies.
Even as orders for drill ships and rigs have plunged in the wake of the oil shock, Seoul is adopting a long-term view.
The ministry said, “As the world population grows, so will the demand for energy, increasing the need for offshore exploration and production. As a result, we expect demand for the production and fabrication of the relevant equipment to grow in the long term, in anticipation of growing exploration and production of oil, gas, renewable energy, and commercialisation of various marine resources.”
According to IHS Petrodata’s most recent Upstream Spending Report, investment in exploration and production is expected to drop to USD1.160 trillion in 2015 and USD1.096 trillion in 2016, compared with USD1.325 trillion in 2014.
The report stated, “Oil prices will start recovering in 2016 as crude markets begin to balance, driving upstream spending up in 2017-20. However, [exploration and production] capital expenditure is not expected to return to 2014 levels until 2019, when spending is estimated to hit USD1.446 trillion.”
South Korean shipbuilders command a market share of more than 30% in the construction of offshore vessels.