Hyundai Heavy Industries Co and Hyundai Samho Heavy Industries have terminated ten VLCC construction contracts after an undisclosed Oceanian client failed to make payment of construction fees within the deadline.

The total value of the terminated contracts is approximately KRW980bn ($874m), reported Business Korea.

In November 2020, the company secured a contract from the Oceania-based shipping firm for construction of seven VLCCs.

Another contract to build three VLCCs of nearly $263m was also signed by the same client and the company.

Hyundai Heavy Industries Holdings said: “The client did not pay the contractual shipbuilding fee within the deadline so we notified the client of the termination of the contracts.”

The company informed that the cancellation of the contract will be recorded in its last year’s business performance.

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Korea Shipbuilding & Offshore Engineering (KSOE), the parent company of the two shipbuilding firms, recorded $66m as operating profits on a consolidated basis in 2020, indicating a drop of 74.4% from 2019.

Its sales plummeted by 1.8% in 2020 and recorded an operating loss of $16m in the last quarter of 2020.

Recently, KSOE signed contracts with European and African shipping corporations for the construction of three petroleum carriers (PCs) and two mid-sized liquefied petroleum gas (LPG) carriers.

The total value of the order was approximately $230m.

The LPG carriers and PCs will be constructed at Hyundai Mipo Dockyard in Korea’s Ulsan.

The delivery of the vessel will commence sequentially from the first half of 2022.