Bloomberg: Hyundai Heavy Industries Co. and Daewoo Shipbuilding & Marine Engineering, the world's largest shipbuilders, won Iranian contracts worth almost $1 billion to build 10 oil tankers, an Iranian official said. National Iranian Oil Tanker Co. will award the contracts to South Korea-based shipbuilders Daewoo and Hyundai, and Hyundai unit Samho Heavy Industries Co., "within the next three weeks," NITC ... Bloomberg

Hyundai Heavy Industries Co. and Daewoo Shipbuilding & Marine Engineering, the world's largest shipbuilders, won Iranian contracts worth almost $1 billion to build 10 oil tankers, an Iranian official said.

National Iranian Oil Tanker Co. will award the contracts to South Korea-based shipbuilders Daewoo and Hyundai, and Hyundai unit Samho Heavy Industries Co., ``within the next three weeks,'' NITC Planning Manager Abdol-Samad Taagol said in a telephone interview today in Tehran.

Daewoo and Hyundai are increasing their ties to Iran as the country prepares to more than double its fleet of vessels, the result of rising shipping costs and increasing demand. Iran's oil tanker company plans to order another 35 vessels to be built by 2010, including 10 liquefied natural gas carriers, a more complex ship that costs almost twice as much as crude-oil tankers.

Hyundai and Daewoo now have a ``stronger possibility'' of winning future orders in Iran, said Mark Jenkins, senior analyst at London-based shipbroker Simpson, Spence & Young. ``Especially to build LNG vessels, which provide higher profit margins.''

Iran is ordering five Suezmax tankers, the largest that can navigate the Suez Canal, and five so-called Very Large Crude Carriers, ocean-going vessels capable of hauling about 2 million barrels each. LNG vessels cost about $200 million each. VLCCs cost about $120 million, according to Oslo-based shipbroker Fearnleys AS. Suezmaxes are $75 million.

More Orders

The Iranian tanker company has ``never had'' any sanctions- related problem with ordering vessels abroad, Taagol said. Since 1995, the U.S. has imposed economic sanctions on Iran, citing the country's alleged support for terrorism and its pursuit to develop nuclear weapons.

According to the 1996 Iran-Libya Sanctions Act, the U.S. can impose sanctions against companies in other nations that invest in Iran. The U.S. administration has so far avoided enforcing it by keeping under indefinite review the cases of foreign companies operating in Iran.

Iran is the owner of the second-largest oil and gas shipping fleet in the Middle East, after Saudi Arabia. Its holdings consist of NITC and Islamic Republic of Iran Shipping Lines. Iranian Shipping Lines is also planning to expand its fleet of 115 vessels and to start ordering LNG tankers, Ali Ashraf Afkhami, the company's managing director, said two days ago.

``Some 6 million tons of LNG will be carried by six ships in 2010 to be increased to 25 million tons by 26 ships in 2015 and to 35 million tons by 36 ships in 2030,'' Afkhami said at a petrochemical conference in Tehran.

NITC issued a tender in February to yards for the 10 tankers. The company plans to order another 35 vessels to be built by 2010, including 20 chemical tankers as well as 10 liquefied natural gas tankers. So-called LNG is natural gas that is cooled and exported in tankers, rather than by pipelines. Demand for LNG is surging as the U.S. and Europe deplete domestic natural gas supplies.

`Fully Booked'

``Chinese and Japanese shipyards were fully booked, but we hope we'll get slots from them for the next five VLCCs we plan to tender,'' Taagol said in the interview. He didn't give a timeframe for the tender to come.

``We do have deals in Iran,'' said Yoon Sang Jin, a spokesman for Daewoo Shipbuilding. ``At this point, there is nothing more we can reveal.'' Hyundai Heavy spokesman Kim Kwang Kook declined to comment.

Iran holds the world's second-largest oil reserves, after Saudi Arabia. With 26.6 trillion cubic meters of gas, the Islamic republic also has the second-largest known natural gas reserves, after Russia.

Over the past five years, NITC has ordered and received 15 vessels from Daewoo, eight from Hyundai and five from Dalian New Shipbuilding Heavy Industries Co., which runs China's No. 2 shipyard, in northeastern Liaoning province, according to Taagol.

China, the world's third-largest shipbuilder, raised its share of new orders by 2 percentage points to 17 percent last year and won its first contract to build liquefied gas tankers.

The Export-Import Bank of Korea will provide ``the biggest share of the financing'' for this month's contracts worth ``slightly less than $1 billion,'' Taagol said. The rest will be financed by commercial banks, including Societe Generale of France, he said.

Andre Ambrosino, Societe Generale's representative to Iran, wasn't immediately available to comment, his Tehran office staff said.

`Priority' to China

Iran, the biggest exporter of oil to China, may order its first liquefied natural gas carrier this year, Taagol said, echoing earlier comments by NITC Chairman from Mohammad Souri. Iran agreed in October to supply gas to China over 30 years.

``We'll give priority to Chinese shipyards if China is to become our biggest consumer of gas,'' Taagol said, adding that Iran had made ``no firm commitment yet.'' At present, Japan builds the ``best'' LNG tankers in the world, the manager said.

NITC operates a fleet of 28 oil and gas tankers with a total capacity of 5.1 million deadweight tons, according to its Web site. Another 13 vessels are being built by Iranian shipyards, Taagol said.