Daewoo Shipbuilding Terminates Contract Due to Nonpayment... Aftermath of Russian Sanctions

[Image source=Yonhap News]

[Asia Economy Reporter Oh Hyung-gil] As Western countries' financial sanctions against Russia have made it difficult for Daewoo Shipbuilding & Marine Engineering to receive payment for shipbuilding, the company has canceled a contract for one liquefied natural gas (LNG) carrier.

On the 19th, according to Daewoo Shipbuilding, among the three LNG carriers ordered from a European shipowner in October 2020, the interim payment for one vessel under construction was not received by the deadline, leading the company to notify the shipowner of contract termination.

The original contract amount for the three LNG carriers ordered by Daewoo Shipbuilding & Marine Engineering was 1.0137 trillion KRW, and the canceled contract for one vessel is approximately 337.9 billion KRW. The remaining two vessels amount to 678.5 billion KRW.

A Daewoo Shipbuilding official stated, "We received part of the order amount during the shipbuilding process, but since the interim payment was not received afterward, we had no choice but to notify the contract termination. We have informed the shipowner and are awaiting their response."

This contract termination is reportedly due to financial sanctions on Russia amid the prolonged Russia-Ukraine conflict.

Industry sources estimate that the shipowner is likely the Russian state-owned energy company Novatek. Due to current financial sanctions, Russian shipowners are unable to make payments domestically in Korea.

Daewoo Shipbuilding is currently constructing the remaining two vessels, and since the payment schedules differ under the contract, no payment defaults have occurred so far.

This content was produced with the assistance of AI translation services.