Brussels concerned that $2 billion shipbuilders’ tie-up will drive up LNG prices in Europe
The European Union’s antitrust regulator is getting ready to stop a $2 billion merger between two of the world’s leading LNG cargo shipbuilders, citing anti-competitive behavior.
The decision on the proposed merger between Daewoo Shipbuilding & Marine Engineering and Hyundai Heavy Industries is likely to be announced this week, people familiar with the matter told the Financial Times. The two South Korean companies dominate the market for making ships that carry super-chilled liquified natural gas. They are significant ship suppliers to the EU.
According to an unnamed EU official, the blocking of the deal could help protect European consumers from paying higher prices for LNG, which emits less carbon dioxide than coal but is still a source of greenhouse gas emissions.
Along with the skyrocketing energy prices in Europe this winter, freight costs for liquefied natural gas in Asia also surged to record levels of more than $300,000 per day on global demand. Ships carrying LNG to Asia have been rerouted to Europe, where consumers are willing to pay a premium for the fuel to generate electricity.
The proposed Hyundai Heavy-Daewoo merger was first announced in 2019. It has been approved by regulators in Singapore, China, and Kazakhstan, but still needs the green light from the EU, Japan, and South Korea.
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