Daewoo to Build LNG FPSO for $2.5B PNG Project by 2014

SEOUL (Dow Jones Newswires), Dec. 20, 2010

Daewoo said Monday it will build a floating processing, storage and offloading liquefied natural gas facility for a $2.5 billion Papua New Guinea project, paving the way for further international orders.

"The Papua New Guinean order will help us to win an additional order for a high-end LNG FPSO, starting from next year," a Daewoo Shipbuilding spokesman said, without elaborating on the value of the offshore facility or on any specific follow-on contract.

This order makes Daewoo Shipbuilding only the second company to sign a contract to build a high-end LNG FPSO, following its South Korean rival Samsung Heavy Industries.

Daewoo Shipbuilding's exploration unit DSME E&R will operate the LNG FPSO jointly with PNG's state-run oil and gas and minerals company Petromin PNG Holdings and Norway's Hoegh LNG, after Daewoo Shipbuilding completes building the FPSO facility by 2014, the spokesman said.

Earlier Monday, a person familiar with the matter told Dow Jones Newswires Papua New Guinea is adopting LNG-FPSO technology to develop and commercialize its onshore and offshore gas reserves.

"The approval is the first milestone for the LNG project and further proves that (PNG) shares the partnership's view that its project will be a vital part for the future development of gas resources in PNG," the three companies said in a joint statement.

At 0202 GMT, shares in Daewoo Shipbuilding rose 2.2% to KRW35,500 on the back of the news after opening 1.2% lower.

The world's second-largest shipbuilder by sales, will build the 3 million-metric-ton-a-year LNG FPSO and processing systems at its Geoje, South Korea, shipyard, according to the statement.

Natural gas produced at Papua New Guinea onshore fields will be transported through pipeline to the floating LNG-producing plant that processes natural gas into LNG, natural gas that is chilled to the liquid state so it can be shipped by tanker to places not connected by pipeline.

The FPSO's capacity is equivalent to 15% of South Korea's annual gas demand, the person said, without specifying details of any offtake agreement.

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