On March 29, 2024, the Peruvian Navy awarded a contract to HD Hyundai Heavy Industries (HHI), valued at $463 million, for the co-construction of one 3,400-ton frigate, one 2,200-ton Offshore Patrol Vessel (OPV), and two 1,500-ton Landing Craft Units (LCUs), with a completion target set for 2029. For this project, the largest defense deal for a South Korean company in Latin America, HHI will collaborate with Sima Shipyard, a Peruvian local shipyard.
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The Peruvian Navy will receive one 3,400-ton frigate, one 2,200-ton Offshore Patrol Vessel (OPV), and two 1,500-ton Landing Craft Units (LCUs), with a completion target set for 2029. (Picture source: HHI)
The arrangement between HHI and the Peruvian Navy is part of Peru's larger initiative to advance its national industries, with a particular emphasis on the naval sector. Sima Peru S.A., a state-owned Peruvian shipbuilder, conducted a global search for a suitable shipyard partner, extending invitations to major naval yards and defense industries across various countries, including Germany, Korea, Spain, the USA, France, Italy, the Netherlands, and the UK.
The significance of the contract is viewed in the context of a broader market opportunity, given the aging state of many ships in the South American region and the consequent future demand for modern naval vessels. Won-ho Joo, the Vice President and head of HHI's special ship business unit, remarked on the contract's importance for establishing a foothold in the South American warship market. He pointed to HHI's intention to leverage its export experience and technological capabilities to enter and expand within this market.
The selection process for this partnership evaluated a range of factors, including technical capability, cost, timeline, the potential for technology transfer, and the level of involvement from the Peruvian industry. The assessment process involved input from CENTRUM PUCP and culminated in HHI's selection, a decision facilitated by the support of several South Korean government bodies, such as the Ministry of National Defense, the Defense Acquisition Program Administration, the Ministry of Trade, Industry and Energy, the Korean Embassy in Peru, and the Korea Trade-Investment Promotion Agency (KOTRA).
This contract potentially paves the way for future opportunities for HHI in the region, as the company anticipates it might lead to more contracts over the next 15 years, particularly as the Peruvian Navy plans to acquire additional vessels, including five frigates, four deep-sea patrol ships, and two landing ships.
The vessels set for construction under this contract include one 3,400-ton frigate measuring 127 meters in length and 14.9 meters in width, capable of reaching speeds of up to 26.5 knots and covering distances of 6,000 nautical miles. This frigate is equipped with anti-ship missiles, vertical launchers, and an AESA radar, enhancing its anti-aircraft detection capabilities.
Complementing the frigate is one 2,200-ton Offshore Patrol Vessel (OPV), with dimensions of 95 meters in length and 14.3 meters in width. With a maximum speed of 20 knots and a range of 6,000 nautical miles, this vessel can operate a medium-sized maritime operation helicopter. Additionally, plans include integrating a mission module allowing for the flexible adaptation of onboard equipment to fulfill various mission requirements. Alongside these vessels, the Peruvian Navy will benefit from the addition of two 1,500-ton Landing Craft Units (LCUs), each with a length of 58 meters, a width of 13.2 meters, and a maximum speed of 10 knots. These LCUs have a range of 1,500 nautical miles and the capability to transport more than seven large armored vehicles or over 20 20-foot containers, underscoring their significance in supporting amphibious operations and logistical missions.
