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The American shipping subsidiary of South Korean industrial conglomerate Hanwha in July ordered a liquified natural gas (LNG) carrier from a fellow subsidiary, Philly Shipyard, as part of its effort to upgrade and invest in a shipyard they hope ultimately build U.S. Navy ships.
Hanwha Shipping is the U.S. subsidiary of the conglomerate’s Korean Hanwha Ocean shipbuilder and at the end of 2024 Hanwha closed on a deal to purchase the Philly Shipyard, with ownerships split between Hanwha Systems, a defense business segment, and Hanwha Ocean.
Earlier this month, Hanwha Philly Shipyard CEO David Kim told reporters the company is looking to invest in the shipyard through internal and U.S. government funding such that it can reach an annual six- to 10-ship production rate via revitalizing and modernizing the shipyard (Defense Daily, July 17).
However, this latest order is an example of purely internal funding, with Hanwha ordering a ship from another arm of itself.
The newest announcement said the LNG carrier will be made with advanced technology and propulsion systems and represent the first U.S.-ordered export-market-viable LNG carrier in nearly 50 years.
The order comes with an option of an additional vessel.
A Hanwha Philly Shipyard spokesperson told Defense Daily the contract is worth about $250 million per LNG carrier plus additional costs accrued by Philly Shipyard for undertaking the new work and sending personnel as needed to Korea.
The spokesperson added Hanwha sees this as “part of our shipbuilding technology and capability transfer from Korea to the U.S. It’s a novel strategy— namely our experience in LNG operations allows Hanwha to be a credible demand signal.”
While the announcement said production would be split between South Korea and at Philly Shipyard, the spokesperson said the percentage split is still under discussion.
“They will collectively determine what happens where. With Hanwha Philly Shipyard as the “shipbuilder” under contract terms with Hanwha Shipping, this gives Philly effective control over the decision-making process regarding what they are comfortable undertaking and when they want to leverage their affiliates like Hanwha Ocean. Over time, the Philly Shipyard’s capabilities will increase.”
The Philly Shipyard plans to deliver the carrier in the first half of 2028.
The company added all parts of the conglomerate are working to transfer the right set of capabilities to Philly so it can learn lessons from Hanwha Ocean, which has built over 200 LNG carriers in South Korea.
The spokesperson also admitted the plan is that if the second vessel option is executed, a larger part of the work for it would occur at Philly.
“That’s the plan. Our capability transfer process is continuous, with Hanwha Philly Shipyard in control and determining, along with Hanwha Shipping, what they can do to be as qualified as Hanwha Ocean when it comes to building LNG carriers.”
During the media event in July, Kim admitted while Hanwha bought Philly Shipyard for $100 million, they planned to spend $300 million to $400 million to revive one of the two dry docks currently being used as a wharf and ultimately spend many times the initial buying cost to modernize the yard and make it closer to being as productive as the South Korean shipyards.
Kim also said investment to be able to make modern LNG carriers is aimed at also making them an attractive choice to bid on more advanced government vessels, particularly U.S. Navy auxiliary ships and ultimately combat ship modules or entire U.S. Navy combat ships.
