Hanwha Ocean faces mounting costs from blocked icebreaker delivery to Russia

Hanwha Ocean's liquefied natural gas carrier / Courtesy of Hanwha Ocean

By Lee Min-hyung

• Published Jun 17, 2026 4:46 PM KST
• Updated Jun 17, 2026 6:15 PM KST

Shipbuilder pays unwanted costs for 6 LNG carriers due to sanctions on Russia

Hanwha Ocean is saddled with hundreds of millions of dollars in financial burden, as a fleet of six icebreaking liquefied natural gas (LNG) carriers remain undelivered at a domestic shipyard due to sanctions on Russia’s Arctic project, according to industry sources and a report.

The specialized vessels, built for Moscow’s high-stakes Arctic energy expansion venture, have turned into a costly asset for Hanwha Ocean, leaving the Korean shipbuilder with few viable options beyond waiting indefinitely for new buyers or selling the ships at steep discounts.

The company secured a massive order to construct six highly sophisticated Arc7-class LNG carriers for the Arctic LNG 2 project pushed by Russian gas producer Novatek.

Under the project, Hanwha Ocean was supposed to deliver three of the vessels for Sovcomflot, the largest shipping firm in Russia, and three for Japan’s Mitsui O.S.K. Lines. All were scheduled for delivery by the end of July 2023 for the Arctic project, according to a report by the Oxford Institute for Energy Studies.

However, Russia’s invasion of Ukraine and subsequent sanctions by the U.S. and its allies prevented Hanwha Ocean from delivering them on time, leaving all of the completed vessels stranded at its shipyard in Geoje, South Gyeongsang Province.

Industry officials said Hanwha Ocean has no choice but to find potential buyers for the stranded vessels, but prospects are slim.

“Hanwha Ocean is forced to either absorb continuous maintenance costs while waiting indefinitely for an eligible buyer, or engage in dumping sales even at the expense of financial loss,” a shipbuilding industry official said on condition of anonymity.

Modern LNG carriers command a market price of roughly $260 million each, but the specialized icebreaking Arc7 vessels carry a higher price premium due to their complex engineering. The combined value of the six stranded vessels is estimated to be much higher than $1.56 billion, according to industry sources who cited standard market values.

They say that, under most international shipbuilding contracts, buyers typically pay 50 percent of the total contract value upon final physical delivery. This means Hanwha Ocean has yet to receive at least $780 million, according to calculations based on the vessels’ 2026 valuation.

Completed ships require continuous and active maintenance, so the company is paying expenses with no immediate end in sight.

“Since the shipyard must keep its active berths clear for ongoing commercial construction, these completed megasized vessels have to be relocated to external holding facilities, which means Hanwha Ocean also pays unwanted rental fees for the vessels,” the industry official said.

Furthermore, the ships must be periodically operated and electronically managed to prevent mechanical degradation. For instance, removing hull rust and maintaining specialized systems on an icebreaker is far more technically demanding and expensive than on a standard carrier, according to the official.

Another official from the shipbuilding industry said the vessels’ limited usage will make it hard for Hanwha Ocean to find potential buyers anytime soon.

“The vessels are engineered specifically to cut through thick Arctic ice sheets, making them commercially unviable and technologically redundant for traditional warm-water maritime routes,” the official said.

Officials from Hanwha Ocean declined to comment on the issue.