South Korean shipping group Hyundai Merchant Marine (HMM) has entered a letter of intent (LoI) with Daewoo Shipbuilding & Marine Engineering (DSME) to build five 300,000t very large crude carriers (VLCCs).

The deal includes an option for five additional vessels and is expected to be finalised by the end of July.

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HMM and DSME are also set to discuss liquefied natural gas (LNG) carrier engines and other various eco-friendly technologies, which may potentially be used on-board the vessels.

The VLCCs will be the first ships to be developed under a new KRW2.6tr ($2.28bn) shipbuilding programme that was first announced by the Korean government in October.

Hyundai Merchant Marine CEO Chang-keun Yoo said: “We currently operate 12 VLCCs, which have been foundational to stable profits and enhancing sales competitiveness.

“We thought this year is the right time to order new VLCCs at historically low newbuilding price.

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"The VLCCs will be the first ships to be developed under a new KRW2.6tr ($2.28bn) shipbuilding programme that was first announced by the Korean government in October."

“HMM’s fleet competitiveness in the medium and long run will be further strengthened through the New Shipbuilding Programme.”

The company is also planning to order a number of small-medium sized container vessels in addition to the VLCC.

HMM previously signed a memorandum of understanding (MoU) with state-backed Korea Shipping Company last month for the sale of several vessels, which are said to have a combined worth of up to KRW850bn ($739.4m).

The agreement entails HMM selling ten of its container ships to KSC among others, and is expected to benefit HMM's overall financial standing.

Image: Deal signing between Hyundai Merchant Marine and DSME representatives. Photo: courtesy of Hyundai Merchant Marine Co. Ltd.