DL E&C Wins KRW 1.6T Russia Gas Chemical Plant Contract

Source: www.gulfoilandgas.com 1/3/2022, Location: Asia

- Wins Russia’s largest natural gas development project, proving technological prowess and defeating advanced European competitors
- Seeks highly profitable projects in Russia on back of engineering track records proven in the major global plant market

DL E&C Co., Ltd specializing in EPC has won a contract to participate in a project to build a mega-scale gas chemical plant in Russia. It was the fruition of the company’s hard work to open up new overseas markets.

DL E&C announced on January 3 that it signed a deal to get involved in the Russian Baltic Complex Project. The value of the contract is KRW 1.6 trillion (about EUR 1.17 billion). DL E&C will take charge of design and equipment procurement.

The heart of the project is to construct the world’s largest polymer plant on a single-line basis in the region of Ust-Luga 110 kilometers southwest of St. Petersburg. The plant will be capable of producing 3 million tons of polyethylene, 120,000 tons of butane and 50,000 tons of hexane a year. Ust-Luga is one of the major Russian port cities bordering the Gulf of Finland. A large investment there is now underway to construct Russia’s largest gas and chemicals complex with the annual capacity of processing 45 billion cubic meters of natural gas into LNG and chemical products.

DL E&C gives meaning to winning in the competition against advanced European construction firms to get involved in the largest plant construction project in Russia. Winning the contract in Russia, a big player in the global petrochemical market, proves its technological prowess. Now that it has hard-to-beat competitiveness, DL E&C looks forward to winning new contracts in Russia.

On the back of skills and know-how in basic design, DL E&C outrivals European firms to land a contract

DL E&C has been involved in the basic project design of the Russian Baltic Complex Project since December 2019. A basic design is a stage of drawing a rough sketch of a plant, laying the foundation for project design and quotation. It has been dominated by major European construction companies. DL E&C could be awarded the contract thanks to its basic design skills recognized by the Russian entity responsible for the project.

DL E&C is striving to take part in the main construction. Its participation in basic design will be of help to foreseeing difficulties that could arise from the main construction stage. This will make it possible to manage overall project risks beforehand and also to complete the optimal detailed design that could maximize the efficiency and profitability of the project. Considering these, DL E&C has an advantage over competitors in the contest for the right to participate in the main construction.

DL E&C’s competitiveness in the Russian market becomes hard to beat

DL E&C is paying attention to the potential of Russia as a way to diversify its market. It established a local firm in the country in 2015 to explore the market in earnest. Though it underwent several trials and errors in its early days, it has steadily piled up achievements made through its participation in an array of projects involving gas, oil refinery and petrochemicals.

DL E&C expects to win new orders on the back of human resources, know-how and project implementation capability that it has accumulated in the Russian market. It is pursuing growth and profitability by escaping overcrowded markets to penetrate new markets aggressively. Its operating profit ratio for the third quarter of 2021 shot up to 14.3 percent, the highest in the industry. Now that it has a stabilized profit structure as a result of focusing on lucrative projects, its rapid growth will be indisputable only if it gets new high-margin major projects.

“This project is meaningful in that we won a big order in Russia, a market regarded as a high barrier to entry for Korean construction companies,” said Yoo Jae-ho, head of DL E&C’s plant business division. “We would strengthen our digital innovation and BIM-based design ability to solidify our position in the expanding Russian market.”


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