Dosan Ahn Chang-ho, a 3,000-ton submarine designed and built by Hanwha Ocean. Photo courtesy of Hanwha Ocean
Hanwha (000880.KS) is participating in a large-scale liquefied natural gas (LNG) infrastructure project in Canada, strengthening cooperation with the local industry. The move aims to significantly boost its “economic contribution,” which has become a key competitive factor that will determine success or failure ahead of the result of the 60 trillion won Canadian Patrol Submarine Project (CPSP) late this month.
According to industry sources Wednesday, Hanwha Ocean (042660.KS) recently signed a memorandum of understanding (MOU) with Canadian energy company Canata for LNG business cooperation. Through this, Hanwha Ocean will participate in a floating LNG production facility (FLNG) construction project that Canata is pursuing in Prince Rupert, British Columbia, Canada, worth $15.7 billion (about 24 trillion won) with an annual capacity of 12 million tons.
Hanwha Ocean is reviewing plans to design and build the FLNG infrastructure and provide maintenance support, as well as to serve as a key buyer of the LNG produced there through a long-term purchase agreement. It will also support LNG carriers (LNGC) and bunkering vessels (LNGBV). To take part in such business, the company is also pursuing strategic investment in the project. Hanwha Ocean plans to refine its cooperation plan through additional due diligence and consultation and to conclude a partnership.
The two companies plan to secure leadership in the global LNG market by maximizing synergy between Hanwha Ocean’s world-class FLNG construction and operation capabilities and Canada’s vast natural gas resources.
Industry analysts say this cooperation is a move to once again significantly raise Hanwha Ocean’s chances of winning the CPSP project, for which a preferred bidder will be selected late this month. The CPSP is a project to supply Canada with 12 submarines at a cost of up to 60 trillion won, with Hanwha Ocean and Germany’s ThyssenKrupp Marine Systems (TKMS) competing. As the “Industrial and Technological Benefits (ITB),” an indicator of how much a contractor contributes to Canada’s national economy beyond mere technological capability, has emerged as the key competitive factor determining the outcome, Hanwha Ocean has once again signaled its intention to actively pursue investment and cooperation in Canada.
In connection with this, Hanwha Ocean has sent overtures to the local government, announcing that it would cooperate with about 100 companies in Canada, create some 20,000 jobs annually, and contribute to inducing $94 billion (about 144 trillion won) in gross domestic product (GDP). Earlier this year, it agreed to jointly pursue the “Newfoundland Project,” an LNG extraction business, with another company, Permuse Energy. It also decided to establish a joint venture (JV) with the Automotive Parts Manufacturers’ Association of Canada (APMA) to produce strategic weapons such as the K9 self-propelled howitzer and Chunmoo locally. In addition, it invested $345 million (about 530 billion won) in steelmaker Algoma Steel and signed an MOU with space startup Reaction Dynamics to strengthen light and medium launch vehicle capabilities, promising all-around cooperation.
“We are not letting our guard down for even a minute or a second and are doing our best,” a Hanwha Ocean official said. “We will try everything we can do before the announcement (of the preferred bidder).”