Hyundai Heavy Industries’ Iran Deal in Trouble

(Image Courtesy: The Guardian Nigeria)

Hyundai Heavy Industries (HHI) is facing an increasingly uncertain outlook for its expanding business deals with Iranian companies amid the renewed U.S. sanctions against the Middle Eastern nation.

The world’s largest shipyard was supposed to deliver ordered container ships to an Iranian shipping company starting April, but has yet to deliver a single vessel.

In December 2016, HHI signed a deal with Iran’s state-owned Islamic Republic of Iran Shipping Lines (IRISL) to build four 14,500 twenty-foot equivalent unit (TEU) containerships and six 49,000-ton tankers for petrochemical products. The contract was worth 820 billion won (USD 700 million).

It was the first shipbuilding order from Iran since economic sanctions against the country were lifted in January 2016. Under the deal, HHI built the four container ships while its affiliate Hyundai Mipo Dockyard built the tankers. The vessels were supposed to be delivered from the second quarter of this year.

“All we can do now is take a wait-and-see approach,” an HHI official said to The Korea Times. “Not a single ship has been delivered to IRISL. It is impossible for us to deliver the ships with U.S. sanctions back in position.” This isn’t the first time for HHI to experience difficulties in delivering ordered vessels to IRISIL.

In 2008, Hyundai Mipo Dockyard signed a deal with the Iranian shipping firm to build 10 tankers and 7 bulk carriers. IRISL completed the payment for its order, but Hyundai Mipo Dockyard managed to build and deliver only one ship due to the sanctions against Iran over the country’s nuclear enrichment program.

HHI reportedly reflected the payment of the remaining 16 ships in the December deal. “Expectations were high since the nation’s shipbuilding industry has long experienced difficulties due to an ‘order cliff,'” said an industry insider.

“Iran is one of the largest countries in the Middle East. The industry expected the country’s demand would help boost sales. Now with the U.S. sanctions, however, it will be difficult to do business with the country.”

(Source: The Korea Times)

Sea News, June 11