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

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.”


Aramco chief sees demand for oil staying above 100m barrels

Updated 23 January 2020

Aramco chief sees demand for oil staying above 100m barrels

  • A panel on the global energy outlook at the WEF in Davos heard that renewable energy alone would not be able to meet rising demand for power as more people moved into the middle class
  • The panel also heard that coal, not oil, remained the biggest source of carbon emissions

DAVOS: Aramco CEO Amin Nasser said he expected global oil demand to stay above the 100 million barrels threshold as the rise of the global middle class spurred demand for energy.
A panel on the global energy outlook at the World Economic Forum in Davos heard that renewable energy alone would not be able to meet rising demand for power as more people moved into the middle class.
“There will be additional demand and the only way to meet it is if you continue to provide affordable, reliable and viable energy to the rest of the world,” said the Aramco CEO.
“There is good penetration from renewables and electric cars are picking up however you need to consider what is happening in the world. There are still an additional 2 billion people coming. There are currently 3 billion people using biomass, animal dung, kerosene for cooking and there are 1 billion people today without electricity and almost 50 percent of people have never flown in an aeroplane.”
The panel heard that coal, not oil, remained the biggest source of carbon emissions but that the location of many coal-fired power plants in developing Asian economies meant that reducing its impact was a major challenge.
“The number one source of emissions by far is the coal fire power plants – they alone are responsible for one third of emissions,” said International Energy Agency Executive Director Fatih Birol. “But they are in many cases the number one source of electricity generation in low income countries - so this is not a black and white issue.”