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Hyundai HI talking with Iran’s IRISL over orders as US sanctions loom    13/06/2018
Hyundai Heavy Industries (HHI) has told Fairplay that it is in discussions with Islamic Republic of Iran Shipping Lines (IRISL) regarding the handover of 10 vessels commissioned in 2016.

Contract signing

Contract signing in December 2016, (left) HHI vice-president Chung Ki-sun and (right), IRISL managing director Amirsaman Torabizadah. Credit: IRISL

In December 2016, following the easing of the previous round of US and EU sanctions against Iran, IRISL ordered four 14,500 teu container ships and six 49,000 dwt MR product tankers. The container ships have been almost completed but are sitting in HHI’s main yard in Ulsan, while IHS Markit’s Maritime Portal shows that three of the product tankers have been launched in Hyundai Mipo Dockyard, which is designated to build mid-sized vessels.

The re-imposition of US sanctions against Iran has once again, affected South Korean shipbuilders’ Iranian contracts.

On 8 May, US President Donald Trump announced that the United States would withdraw from the Joint Comprehensive Plan of Action (JCPOA), or the Iran nuclear deal.

The JCPOA was signed between the United Kingdom, China, Germany, Iran, Russia, the European Union, and the United States in July 2015 and lifted certain sanctions against Iran in exchange for it scaling back its nuclear programme. Trump claimed the agreement was one-sided and had no effect on Iran’s nuclear ambitions.

IRISL’s container ships were priced at USD110 million each, while the tankers were USD35 million each, translating into a total contract value of USD650 million.

“We are now discussing the delivery schedule with IRISL, but we will have to see how it goes,” HHI said.

The container ships, BarzinHamounRadin, and Rayen, were scheduled for delivery in July and August, while the product tankers were slated for handover from June to January 2019.

HHI did not provide details regarding payment for the ships.

Payments for newbuildings are done in phases that are stipulated in the contracts. Typically, the customer makes a downpayment of 20%, with the rest to be paid in stages, or, if the shipyards agree to a 'heavy-tail' payment, which was common when competition was keen for orders, the remaining 80% is paid upon delivery of the vessel.

It is not the first time that sanctions have hit Iranian newbuilding orders in South Korea. A decade ago, before the last round of sanctions against Iran were imposed, IRISL had placed orders for 10 35,000 dwt bulk carriers at now-defunct SPP Shipbuilding. The global financial crisis and the last round of sanctions resulted in this order being suspended and then cancelled.

 




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