Samsung Heavy Industries Receives Notice of Contract Termination for 17 Ships from Russia

Samsung Heavy Industries has received a contract termination notice regarding 17 vessels ordered from Russia's Zvezda Shipyard between 2019 and 2020.

On the 13th, Samsung Heavy Industries announced through a voluntary disclosure that it had been notified of contract termination for 10 liquefied natural gas (LNG) carriers and 7 North Sea shuttle tankers ordered from Russia's Zvezda Shipyard in 2020 and 2021.

Due to the impact of the Russia-Ukraine war and sanctions imposed on Zvezda Shipyard, shipbuilding became impossible, prompting the shipyard to request contract termination and refund of advance payments from Samsung Heavy Industries, its technical partner. Samsung Heavy Industries plans to file the case with the Singapore arbitration court.

Zvezda Shipyard notified the termination of contracts for 10 LNG carriers and 7 shuttle tankers and demanded the return of $800 million (approximately 1.1 trillion KRW) in advance payments already made, along with delay interest.

Previously, Samsung Heavy Industries had signed construction contracts for 15 icebreaking LNG carriers and 7 shuttle tankers to be deployed in Russia's large-scale LNG development project 'ARCTIC LNG-2' between 2019 and 2020. The total contract amount was $4.2 billion (approximately 5.7 trillion KRW), marking the largest contract in the shipbuilding industry at the time.

However, Samsung Heavy Industries signed a design contract as a technical partner of Zvezda Shipyard, not a construction contract. Zvezda Shipyard is one of the largest local shipyards located in Bolshoy Kamen, Russian Far East. Accordingly, the vessels were built at Zvezda Shipyard in Russia, not at the domestic Geoje shipyard. This is also why Samsung Heavy Industries announced the supply of ship blocks and equipment rather than a shipbuilding order after the contract.

Subsequently, Samsung Heavy Industries dispatched local personnel to Zvezda Shipyard and completed the construction and delivery of 5 out of the 15 LNG carriers.

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