South Korea’s SK Engineering & Construction (SK E&C) has been awarded a $1.6 billion contract to modernize an oil refinery in northwest Iran.
The project involves upgrading outdated facilities and installing new technologies and systems at the plant, in Tabriz, in Iranian Azerbaijan. As part of the contract, a new desulfurization system will be installed, enabling the plant to meet the new Euro-5 emissions standard.
SK E&C will undertake design, purchase, construction work and financing on the project, with its Iranian consortium partner, Oil Design and Construction Company.
Construction work at the plant, which has a refining capacity of around 110,000 barrels a day, is expected to take 36 months from ground breaking to completion.
Separately, SK E&C signed a contract to acquire 30 percent of independent power producer in UNIT International Energy. The Iranian power project is worth 3.4 billion euros, which includes power plants costing 2.5 billion euros. Groundbreaking is slated for January 2018.
The company will join UNIT International’s ongoing project to construct and operate five gas-fired power plants in Iran. In total, the power plants will have a combined power generation capacity of 5,000 megawatts.
Kang Ho-In, Minister of Land, Infrastructure and Transport, emphasized the government-level support for the project, which is the first time Korea has participated in Iran’s independent power producer sector.
The opportunity is said to result from SK E&C’s abundant experiences in the development of projects at home and abroad.
On March 17, SK E&C announced that, in Istanbul, Turkey, the company and UNIT Group signed a contract for SK E&C’s acquisition of 30 percent of UNIT International Energy. Attendees to the signing ceremony were parties from both companies, including An Jae-Hyun, President of SK E&C’s Global Biz, and Unal Aysal, Chairman of UNIT Group. Also, Kang Ho-In, Minster of Land, Infrastructure and Transport, who was visiting Turkey as a representative of Korea, attended the ceremony to support a Korean company for its overseas construction contract.
UNIT International Energy, a subsidiary of UNIT Group founded in Turkey, won an order for the independent power producer project to build a gas combined cycle power plant on Jan. 23, 2017 from the Iran government. It also completed a power purchase contract for the generated power with Iranian national power corporation Thermal Power Plants Holding Co., (TPPH).
An official of SK E&C explained that the power purchase agreement was firmly secured and includes measures to ease Iran’s political risk and contains a guarantee from the Iran government.
This project to build and operate five gas combined cycle power plants in five different places is Iran’s largest power generation project. SK E&C will be in charge of the construction and it (30 percent share) will jointly participate in operating the plants with UNIT Group (70 percent share) after the completion.
After commencing construction of 1,200MW and 880MW units in Saveh and Zahedan respectively in January 2018, the company will conduct construction of other units. The construction will take 30 months and the company is targeting commercial operation from the second half of 2020.
It is said that UNIT Group put significance on SK E&C’s experience in the development of projects when they were selecting a project partner. Through the successful completion of Eurasia Undersea Tunnel Project in Turkey in December 2016, SK E&C was able to prove its excellent capability in the development of large projects covering EPC to project development, project financing, and operation.
SK E&C is also executing two more development projects, including a Laos hydropower plant project and the world’s longest suspension bridge, Canakkale Bridge Project, in Turkey.