By Lee Hyo-sik
Daewoo Engineering & Construction and Daelim Industrial have won an order from S-Oil to build a 4.5 trillion won ($4.1 billion) refinery plant in the southeastern industrial city of Ulsan.
The plant, due to be completed in the first half of 2018, is the single largest construction project in Korea, the companies said Wednesday.
The two companies formed a consortium to secure the deal to construct the residue enhancement and olefin production facilities in the Onsan Industrial Complex for Korea’s third-largest refiner by revenue. Saudi Aramco, the world's largest crude exporter, has a 63.4 percent stake in S-Oil.
The planned facilities will convert bunker C oil and other heavy fuel oils into gasoline, propylene and other high-value products.
S-Oil is expected to spend about 1 trillion won to finance the facility design and other preparatory works, while the remaining 3.5 trillion won will be spent on construction.
Daelim holds a 55 percent stake in the consortium worth 1.93 trillion won, while Daewoo has a 45 percent stake worth 1.58 trillion won.
Builders here competed fiercely to win the contract because they were having trouble securing similar deals abroad. Saudi Arabia and other oil-rich countries have become reluctant to build oil-refining facilities because of falling international crude prices.
S-Oil said it would soon hold a board of directors’ meeting to approve the 4.5 trillion won project.
“We believe that the Daelim-Daewoo consortium will successfully carry out the project,” an S-Oil official said. “Daelim has the world’s best engineering prowess, while Daewoo is widely known for its superb construction capability. The partnership will create a great deal of synergy and get the job done.”
S-Oil said that the 4.5 trillion won project was possible because of government policies to promote private-sector investment.
The company sought to expand its refining facilities in Ulsan, but did not have an appropriate site. The government then enabled the Korea National Oil Corp. to sell its crude oil storage site to the refiner, making it possible for the construction of the plant.