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(2nd LD) Daewoo Shipbuilding claims progress in talks with Angola's Sonangol

Industry 17:09 November 15, 2018

(ATTN: ADDS photo)

SEOUL, Nov. 15 (Yonhap) --The head of Daewoo Shipbuilding Marine & Engineering Co. on Thursday heightened the prospect that the world's second-largest shipbuilder by orders could work out its differences with Angolan state oil company Sonangol over a delay in the delivery of two drill ships.

"There is a good prospect (of it happening)," CEO Jung Sung-leep said in a news conference at the company's headquarters in central Seoul. "Negotiations are well under way" over how much Daewoo Shipbuilding will receive from the Angolan oil firm for the delivery of the two ships.

Under the contract, Jung said, Daewoo Shipbuilding should receive 990 billion won (US$877 million) in payment from Sonangol, but the Angolan state oil company balked at full payment as vessel prices have declined.

Still, he gave neither a specific time frame for concluding the deal nor any further details, citing a confidentiality agreement with Sonangol.

Jung Sung-leep, CEO of Daewoo Shipbuilding Marine & Engineering Co., speaks in a news conference at the company's headquarters in central Seoul on Nov. 15, 2018. (Yonhap)

The delivery had been originally scheduled for June and July in 2016 but was delayed due to Sonangol's financial status.

The CEO said he will trim the number of employees in line with next year's sales, though he said he will be "flexible" with job cuts

Last year, Daewoo Shipbuilding agreed with South Korea's state-run Korea Development Bank, which holds a 55.7 percent stake in the shipbuilder, to keep its workforce at around 9,000 based on its sales estimate.

But the company could achieve more than 9 trillion won in sales this year, exceeding its previous estimate, Jung said.

The shipyard has undertaken a massive restructuring plan since 2015 to reduce outlays.

Currently, Daewoo Shipbuilding has about 9,930 employees, and it would have an order backlog valued at around $20 billion by the end of this year, enough to keep the shipyard on South Korea's southern island of Geoje busy for two and a half years.

Park Hyung-gun, a company vice president, said the company expects an increase in orders for liquefied natural gas carriers due to growing global demand for the fuel.

The shipbuilder said it has received $5.45 billion worth of ship orders for 41 vessels, including 12 liquefied natural gas carriers, so far this year, accounting for about 75 percent of its order target of $7.3 billion.

Daewoo Shipbuilding Marine & Engineering Co.'s main office building in Seoul (Yonhap)


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