IRGC Says Iran Should Cancel Korean Ship Orders

Undated file image courtesy SADRA

Published Dec 12, 2016 9:44 PM by The Maritime Executive

An official with Iran's Islamic Revolutionary Guard Corps (IRGC) has called on Iranian president Hassan Rouhani to cancel a recently signed shipbuilding deal with South Korea. The Guard suggests that its own shipyard should handle the volume instead.

The head of the IRGC-controlled construction company Khatam al-Anbiya, Brigadier General Abdullah Abdullahi, argued that the contract is a "neglect of internal power."

"The president should revoke the contract to build 10 ships with South Korea and if this is not done, he can no longer be trusted," Abdullahi said, as reported by the state-owned Shargh Daily.

Abdullahi said that Khatam al-Anbiya's shipyard, SADRA, is capable of building modern vessels for Islamic Republic of Iran Shipping Lines (IRISL).

The IRGC, one of Iran’s most politically conservative institutions, is closely intertwined with many sectors of the Iranian economy. Insiders say that the Corps is in conflict with President Rouhani’s administration over policies favoring liberalization and foreign investment, which it views with suspicion. 

The SADRA yard has been active in the construction of offshore platforms for the South Pars gas field. However, its shipbuilding capacity has gone underutilized, analysts say: a series of four Aframax tankers for Venezuela's PDVSA was never completed, and the first in the series, the Sorocaima, was never delivered. After her completion the Sorocaima was reflagged and renamed the Arita, and analysts suggest that she has been used for floating storage off of Bushehr.

Satellite imagery show vessel sections sitting unassembled alongside the SADRA yard's graving dock, and its large gantry crane appears to lack the rail lines needed to travel the full length of the dock. 

Iranian orders a boost for South Korean shipbuilders

IRISL has ordered four 14,500 TEU box ships and six 50,000 dwt product tankers with Hyundai Heavy Industries. The orders, long under discussion but formally announced on Friday, will all be completed at Hyundai's Mipo Dockyard, and all ten vessels will meet IMO Tier III requirements. 

In return, Hyundai Heavy Industries has agreed to provide technical assistance to Iranian shipyards. 

The orders were a rare piece of good news for a "Big Three" Korean shipbuilder. Hyundai Heavy Industries, Samsung Heavy Industries and Daewoo Shipbuilding and Marine Engineering have all been under heavy financial pressure given the challenging conditions in the container, bulk and offshore sectors. All have come up with government-sponsored restructuring plans, and have announced thousands of layoffs in an attempt to reduce overhead. 

Hyundai is also working closely with Iran’s regional rival, Saudi Arabia. Earlier this month, the shipbuilder announced the inauguration of the King Salman Global Maritime Industries Complex near Jubail, on the Persian Gulf. Upon completion, the $4 billion, five million square meter maritime complex will be able to build commercial ships and offshore facilities and also to provide ship repair services.