Why Shipyards Want to Become Engineering Contractors
As FPSO and FLNG projects become more integrated, shipyards are moving beyond fabrication into engineering, procurement, systems integration and commissioning.
Hanwha Ocean recently released a promotional video for its FPSO business.
The video spends little time on dock capacity or construction output. Its emphasis is on Engineering, Procurement, Construction, Integration and Operations—EPCIO.
Hanwha Ocean's message is straightforward. It remains a shipyard, but it wants to take responsibility for the offshore project as a whole.
Other major yards involved in FPSO and FLNG work are also strengthening their engineering, procurement, integration and commissioning capabilities. The boundary between a shipyard and an engineering contractor is becoming less clear than it once was.
1. Construction Capacity Used to Matter Most
Two or three decades ago, shipyards competed first and foremost on capacity. Dock size, steel throughput, delivery performance and cost had a direct bearing on how much work a yard could win.
Shipyards already carried out design and procurement. Commercial ships, however, are relatively repeatable products. Their main machinery, cargo arrangements and propulsion systems draw on mature solutions, and the contractual boundaries are usually clear.
Offshore projects were often divided into smaller packages. An oil company or specialist EPC contractor would retain overall engineering and major procurement, while the yard built the hull, fabricated modules or performed final integration. Production control, cost discipline and on-time delivery were the yard's main competitive strengths.
2. Clients Now Look at the Whole Project
The scope of an FPSO or FLNG contract is harder to separate into neat parts. Every field has different production rates, fluid properties and development conditions, so the topside process facilities usually need to be engineered for the project. A contract can run from concept work through offshore installation and start-up support.
A large FPSO or FLNG project may involve hundreds of suppliers across dozens of countries. Late equipment, delayed vendor data or a mismatch between hull and topside interfaces can disrupt installation and commissioning further down the schedule.
Operators once had to coordinate engineering houses, equipment vendors, module yards and shipyards separately. Some now place larger packages with a single contractor to reduce interfaces and make responsibility clearer. Yards with the required capability have consequently moved into engineering, procurement and project management.
3. Why Engineering Capability Matters More
Fabrication remains the foundation of a shipyard. Yard space, heavy-lift capacity, quality systems and an experienced workforce are all essential. The additional challenge is to bring engineering, procurement and commissioning into the same project plan.
A change in topside weight may require the hull structure and lifting plan to be checked again. Late vendor information can hold up piping and control-system design. Offshore projects often slip because engineering, procurement and site construction are not working to a properly aligned schedule.
When clients assess a yard, they look beyond docks and delivery records. The engineering team, procurement system and ability to manage the project now carry more weight. Oil companies award larger packages to yards they believe can organise a complex project and deliver it on time.
4. Not Every Yard Is Following the Same Model
Hanwha Ocean has explicitly set out to become an EPCIO solutions provider. Samsung Heavy Industries has built its position in FLNG through hull and topside work as well as partnerships with liquefaction specialists and engineering companies.
HD Hyundai has placed more emphasis on connecting design and production data to improve engineering and manufacturing efficiency. Seatrium has a broader contracting portfolio: it undertakes turnkey work in some projects and provides construction and integration services to FPSO contractors such as SBM Offshore and MODEC in others. Full EPCIO is not the right model for every yard or every project.
Chinese companies are also taking on more engineering responsibility. CIMC Raffles won the EPCIC contract for the Greater PAJ FPSO in 2026, with a scope covering engineering, procurement, construction, tow-out, offshore installation and commissioning. Wison New Energies draws on its engineering and modular construction experience to undertake large FLNG and FPSO projects.
A wider scope usually brings a larger contract value, but it also exposes the yard to more risk. Under a lump-sum contract, design changes, equipment inflation, vendor delays and commissioning problems can quickly erode the project's margin.
Putting EPC, EPCIC or EPCIO in a corporate presentation is the easy part. The contract sets out who carries responsibility when front-end engineering, global procurement, system interfaces or commissioning go wrong. Construction remains the core business of a shipyard, but its responsibility within the project has expanded substantially.