SK Construction Sets Sights on Plant Business in Thailand
By Kim Yoo-chul
Staff Reporter
For SK Engineering & Construction, Thailand is a land of opportunity to expand its overseas footsteps as a global contractor.
Early this month, the South Korean company signed a $170 million refinery expansion deal with PTT, Thailand’s top oil and gas firm. The contract from PTT’s affiliate Rayang Refinery Public Company (RRC) calls for the firm to build upgrading facilities that turn benzene, toluene, and xylene residue into naphtha, diesel and jet fuel.
The units to be built by February 2009 are likely to raise RRC’s daily crude processing capacity to 200,000 barrels from 145,000 barrels, according to the company.
The deal brought the total value of contracts booked by SK in Thailand to $1.7 billion.
``As the Thai government is accelerating efforts for further construction of chemical plants for economic development, we expect to win more contracts based on accumulated experiences in the field,’’ an SK spokesperson said.
SK Engineering & Construction, established in 1977, is an affiliate of SK Group that also owns the country’s top oil refiner SK Energy, top telecom firm SK Telecom and chemical products manufacturer SK Chemicals.
Brighter Prospects in Plant Business
The company is now turning its eyes on the plant business in Indonesia, Singapore and India following good performances in Thailand and Kuwait.
In March, SK received an order to build oil facilities worth $624 million from the Kuwait Oil Company (KOC) under the wing of the Kuwaiti government.
The construction will be conducted on a turnkey basis and the company will take charge of the whole process from design to purchase and construction.
SK Chairman Chey Tae-won is active in negotiating with big contractors in countries in the Middle East and Southeast Asia in order not to miss the booming construction markets there.
Market analysts say gains from surging orders from the Middle East to Southeast Asia will enable the company to continue its robust growth by 2011.
``Gross margin is increasing by an average of 10 percent thanks to good market conditions. With proven technology and strong overseas networks in the plant business, SK will maintain healthy progress in the next couple of years,’’ said Kang Seung-min, an analyst from NH Securities.
``New orders are expected to rise 4 percent annually by 2010,’’ he added.
But analysts added more investment will be needed to train skilled engineers in the industry if the company is to keep its leadership.
``South Korean contractors, including SK Construction, are competitive enough with their experiences and technology. However, the shortage of industry specialists under the buoyant market circumstances will pose a threat to the company’s further moves,’’ Kang said.