SK Engineering and Construction Co. captured the $2.55 billion Fort Hill Sand Oil Plant Project, its biggest such project in Canada, on June 8, becoming the first Korean construction firm to win an oilsand plant construction project, the company said recently.
It’s also the first time the Korean builder will have to take care of an oilsand FEED.
It’s the first oilsand plant construction project won by a Korean builder in the North American country. The project is also the first in the world to use an oilsand treatment technology that employs high temperature paraffin. Many construction firms in Korea feel that SK E&C cleared the way for Korean builders to win more such projects in Canada, as the country is known to have the largest oilsand deposits in the world. Many more oilsand plant projects will be forthcoming from the North American nation, construction industry sources predicted.
SK E&C entered the construction market in Iraq by winning the $6.04 billion Carvalla Oil Refinery Project in a consortium with Hyundai Construction, GS Construction and Hyundai Engineering in February. SK E&C completed the FEED for the modernization project for the Dora Oil Refinery, the largest oil refinery in Iraq, in 2011. It’s been waiting for a large oil refinery construction project to come along in the Arab nation, and the construction company got it at last.
SK E&C won the global spotlight when it won the natural gas liquefaction project near Lake Charles, Louisiana, in February last year, on an EPC basis in competition with oil majors, which have been dominating such projects around the world. The company signed an MOU with Magnolia Co. of the United States, the owner of the project, which is capable of liquefying 3.4 million tons of natural gas annually.
SK E&C put itself in a good position to win smaller similar projects in Canada by winning the Fort Hill project.
The global construction industry expects some 1,300 small- to medium-scale natural gas treatment plants will be ordered in the years ahead.
Shale gas takes up around 32 percent of oilsand deposits around the world, and small- to medium-sized gas treatment plants maximize profits from shale gas, according to a study done by experts.
SK E&C opted to go for profitability in winning the overseas projects rather than numbers, which is why the builder set the target for its overseas projects at 6 trillion won this year, down some from past years due to a number of reasons, including low oil prices and competition from Chinese builders in overseas construction projects.
The company has also decided to diversify its construction market to other than the Middle East, to places such as North America, Africa and Latin America. It’s also going for only oil refinery and petrochemical plant construction projects in countries with the potential for follow-up projects.
Also,SK E&C has decided to pick up Total Solution Provider (TSP) projects as much as possible, the type construction projects that the company has advantages in over rivals. TSP projects are popular in emerging-market economies. Construction firms are involved in the projects from the early stages — starting with a feasibility study, including commercial feasibility and management of the plants after completion. By signing exclusive contracts, construction firms can win these kinds of projects without going through biddings.
The key advantage for SK E&C is that it has its affiliates in a number of key areas such as oil refineries, telecommunications, SK E&S, and SK Gas that can help the company develop a number of the new construction projects. That’s simply not the case with rival firms in Korea.
The $2.44 billion Jurong Aromatics Complex in Singapore, which the company completed in April, is a representative project for what SK E&C does best in the global construction market.
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