Samsung Heavy Industries’ project to build a marine drilling facility is expected to be delayed after a rig leg was severely damaged in the construction, incurring massive financial damage, the company said Tuesday. 


The company said a 50-meter-long jack-up rig leg, which was connected to a crane, fell to the ground late Sunday while the construction team was attempting to lift and connect it with the main part of the jack-up rig.

A jack-up rig, consisting of a buoyant hull fitted with a movable legs, is used as an exploratory drilling platform, and offshore and wind farm service platforms. The Korean company was to assemble three legs with the main part of the jack-up rig.

The jack-up rig construction was part of the project for Norwegian energy company Statoil. In June 2013, Samsung Heavy Industries won a deal to construct two large-scale jack-up rigs for$1.3 billion to have them used in the North Sea.

With the first one already completed, the company had aimed at handing over the two jack-up rigs to Statoil by April next year.

While no casualties were reported, the damage will likely cause long-term construction delay, massive financial losses and even a deficit in the project.

Samsung Heavy Industries said it was looking into how badly the leg was damaged and calculating how much the damage would cost.

“For now, it is premature to mention the exact damage cost since the company is working to figure it out. (The company) is currently checking whether the damaged leg can be repaired and reused. It is also discussing with the ordering company over the future plan,” an official from Samsung Heavy Industries said.

Amid a slump in the shipbuilding industry, Samsung Heavy Industries had made its way back into the black in the third quarter after two quarters of losses, with 84 billion won ($71.3 million) of operating profit and 2.7 trillion won of sales.

Rather than the orders, the cost-saving efforts and restructuring moves contributed to the third quarter’s performance, industry insiders said.

With a goal of having $5.3 billion of orders this year, the company has only achieved $800 million as of this month.

The shipbuilder is planning to sign a deal of building a floating liquefied natural gas project worth $2.5 billion early next month for Italia’s largest oil and gas firm Eni. If proceeds as planned, it is expected to sharply alleviate the financial burden of the company. 

By Lee Hyun-jeong (rene@heraldcorp.com)