South Korea’s Daewoo Shipbuilding and Marine Engineering (DSME) said on Monday that its Memorandum of Understanding (MoU) with Iran for the construction of offshore plants has been terminated as no progress was achieved on the deal.
The MoU, signed in September 2016, was intended to provide the much-needed boost to DSME’s depleted offshore engineering orderbook, which has been one of the reasons behind the shipbuilder’s financial woes.
The MoU was linked earlier to the construction of at least five jack-up rigs worth around USD 205 million each for the oil producer Iranian Offshore Oil Co. (IOOC).
The deal came on the heels of the lifting of sanctions against Iran in January 2016, a move which saw international delegations rush to the country to negotiate shipbuilding deals as Iran looked to renew its outdated fleet.
The post-sanction cooperation between the two nations has also seen DSME sign a business agreement on operation and technology instruction with the Iranian government for Iran Shipbuilding & Offshore Industries Complex Co. (ISOICO).
The offshore industry downturn and the overall slump in the shipbuilding industry stemming from oversupply across the board have seen DSME resort to debt restructuring measures aimed at cost-cutting.
DSME has achieved two profitable consecutive quarters in the first half of this year, returning to black after last year’s red ink.
The sales for the first half of the year amounted to KRW 6.1 trillion (USD 5.4 billion), the group’s operating profit came at KRW 888 billion, while its net income reached KRW 1.448 trillion.
DSME and its two compatriot yards suffered a major blow last year in their order intake, which stood at USD 10 billion in 2016, slashed from USD 24.3 billion in 2015.
World Maritime News Staff