World’s top two shipbuilders in deal to merge: Seoul

Year after year, the top three shipbuilders churned out enormous cargo ships, oil tankers and offshore drilling rigs for shipping firms and energy giants around the world. (File/AFP)
Updated 31 January 2019
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World’s top two shipbuilders in deal to merge: Seoul

  • The world’s top three shipbuilders are South Korean, but the industry has been hammered in recent years
  • South Korea’s “Big Three” shipbuilders were once hailed as a major driver of the country’s export-reliant economy

SEOUL: The world’s biggest shipbuilder, South Korea’s Hyundai Heavy Industries, has reached a deal to acquire a majority stake in ailing number two Daewoo from the government, Seoul said Thursday.
The world’s top three shipbuilders are South Korean — Samsung Heavy ranks third — but the industry has been hammered in recent years by overcapacity and plunging ship prices.
Daewoo Shipbuilding & Marine Engineering has struggled in particular and has repeatedly been bailed out by the government to avoid collapse, at a total cost of several billion dollars.
Hyundai Heavy itself announced net losses of 633 billion won ($569 million) for 2018 on Thursday, blaming higher steel costs and lower demand.
But the state-funded Korea Development Bank (KDB), which owns 55.7 percent of Daewoo, said Hyundai had agreed to take over its stake.
Rather than paying cash, the shipbuilder will split itself in two and issue KDB shares in a new holding company that will own Daewoo and most of Hyundai Heavy’s existing businesses.
The deal would further consolidate Hyundai Heavy’s position as the world’s largest shipbuilder, giving it more than 20 percent of the global market.
It will go through unless Samsung Heavy makes a better offer, KDB officials said, with a final decision expected in March.
South Korea’s “Big Three” shipbuilders were once hailed as a major driver of the country’s export-reliant economy — the world’s 11th largest.
Year after year, they churned out enormous cargo ships, oil tankers and offshore drilling rigs for shipping firms and energy giants around the world.
But a prolonged slump in oil prices and the global economic slowdown sapped demand for tankers and container ships, while overcapacity, regional rivalry and competition from cheaper Chinese shipbuilders squeezed profit margins.
Hyundai Heavy’s 2018 losses represented a significantly worse performance than the previous year, when it was 93.4 billion won in the red.
The shipbuilder said its acquisition of Daewoo was aimed at “boosting the competitive edge of South Korea’s shipbuilding industry by maximizing the synergy effect.”


Turkey set to begin oil and gas drilling off Cyprus

Updated 21 February 2019
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Turkey set to begin oil and gas drilling off Cyprus

  • “In the coming days we will start drilling with two ships around Cyprus,” Turkish foreign minister said
  • Turkey and the Cypriot government have overlapping claims of jurisdiction in the eastern Mediterranean

ISTANBUL: Turkey will begin drilling for oil and gas near Cyprus in coming days, state-owned news agency Anadolu reported Foreign Minister Mevlut Cavusoglu saying on Thursday, a move that could stoke tensions with neighboring Cyprus and Greece.
Turkey and the internationally recognized Greek Cypriot government have overlapping claims of jurisdiction for offshore oil and gas research in the eastern Mediterranean, a region thought to be rich in natural gas.
“In the coming days we will start drilling with two ships around Cyprus,” Cavusoglu was quoted as saying in a speech to a business conference in western Turkey’s Aydin province.
“Let those who come to the region from far away, and their companies, see that nothing can be done in that region without us. Nothing at all can be done in the Mediterranean without Turkey, we will not allow that,” Cavusoglu said.
Turkey launched its first drillship “Fatih” in October to drill off the coast of Turkey’s southern Antalya province. It said a second ship that it purchased would operate in the Black Sea, but was diverted to the Cyprus area.
Breakaway north Cyprus, which is supported by Turkey, says any offshore wealth also belongs to them, as partners in the establishment of the Republic of Cyprus in 1960.
The island was divided in 1974 after a Turkish invasion triggered by a brief Greek-inspired coup. Countless peacemaking endeavours have failed, and offshore wealth has increasingly complicated peace negotiations, with Greek Cypriots saying the matter is not up for discussion.