Daewoo E&C's Solid
Presence in Nigeria
Daewoo E&C executive suggests development strategies to promote the industry

Korea recently celebrated with having landed $200 billion worth projects from abroad so far since entry into the global construction market. The feat comes 41 years after Korea entered the overseas construction market with a road construction project in Thailand in 1965.
Korean contractors have apparently become excited over the emerging repetition of the boom Korea's overseas construction industry had enjoyed just until the Asian financial crisis. In reality, Korean contractors have entered the so-called Second Overseas Construction Boom since 2004 thanks to a surge of projects, caused by extra crude revenues of Middle Eastern countries arising from crude price hikes. Korea gained momentum to leap into the renaissance of the 1990s boom in 2004 when the country landed $7.5 billion worth of overseas construction projects, and chalked up $10.9 billion worth of projects, surpassing the $100 billion mark for the first time in eight years since the Asian financial crisis. What's more, Korea's overseas construction industry is painting a rosy picture with an estimated $13 billion worth of projects during 2006, a 20 percent surge over 2004 and the accumulative value of overseas construction projects is forecast to reach $300 billion within 10 years.
However, Korea's overseas construction industry still has a long way to go because it has limited capability concerning Engineering Procurement Construction (EPC), a method involving all aspects of constructing from design, construction and start-up, and projecting financing, coupled with a rising competition by major global players.
Take a look into the Korean overseas construction industry. Yoon Kook-jin, chief of Daewoo E&C Overseas Business Division, spoke about strategies designed to develop the overseas construction industry, during a seminar marking the $200 billion mark in overseas construction projects, held at the Korea Chamber of Commerce and Industry Building on May 17.
Yoon said Daewoo E&C have undertaken approximately 30 projects so far since the early 1990s, including gas plants, gas pipelines, LNG, GTL (Gas-to-Liquid) and AGG projects. He forecast that the focus of the future global construction market will shift from oil-related projects to gas-related ones with an expected rise in orders on LNG and GTL projects. He also predicted an expansion of the proportion of environment-related plants in the wake of such environment protection measures as mandatory reductions of greenhouse gas emissions as well as an increase in pharmaceutical, chemical and food/beverage plant orders riding on the improved income earnings.
The Daewoo E&C executive stressed the need for diversifying markets in the business portfolio and sophistication of EPC projects; forging a strategic alliance with leading contractors to penetrate advanced markets; managing resource data in each of EPC areas; strengthening presence in the newly-emerging GTL, DME and NGL projects; and landing power plant projects ordered by independent power producers.
Yoon asked for the government to provide financing, guarantee and insurance support to help contractors win construction orders. He demanded the initial financial support for helping contractors conduct a feasibility study on a potential project and the establishment of a fund designed to facilitate project financing overseas.
Citing a model case of the ongoing $602 million Ras Laffan Refinery Project in Qatar, being undertaken by GS E&C and Daewoo E&C, he called for expanded collaboration among Korean contractors, specializing in regions and countries to preempt excessive competition. The lump-sum EPC-turnkey project, ordered by Qatar Petroleum, TotalfinElf and Exxon Mobil, involves Package I: Refinery and Interconnection and Package II: Tank Farm and Export Facilities.
Yoon emphasized that chances are high that Korean contractors could land projects at areas where they have built up recognition with strengths and in fields where they have accumulated experiences and expertise, and they could also make higher profits.
Nigeria, the biggest oil exporting nation in Africa, is one of the countries Daewoo E&C has built up its presence as part of its efforts to diversify markets.
Daewoo E&C won a project worth $875 million in Nigeria, Gbaran-Ubie Integrated Oil & Gas Project, the largest single one for the company since its participation in overseas construction market. The project makes up about 70 percent of total overseas project orders last year amounting to $1.25 billion and involves the construction of oil and gas production facilities with the capacities to produce 120,000 barrels of refined oil a day and 1 billion cubic feet of natural gas. Under the project, based on the EMC, the facilities, ordered by the Shell Petroleum Development Co. of Nigeria Ltd., will be able to produce 5.4 percent of oil consumed in Korea and 24 percent of natural gas used in Korea.
Daewoo E & C secured a total of $3 billion in construction projects since it entered the African country in 1980. Daewoo was able to win the recognition for its technical capability by conducting projects in rough terrains in Nigeria including work on laying pipelines and building plants to show off what the company can do.
In the meantime, the company clinched an order to build a combined cycle power plant in Nigeria(AFM VI combined Cycle Power Plant Project) from SPDC worth some 500 billion won. The project involves the construction of a power plant with three gas turbines, and a steam turbine capable of generating 650 Mw of power in the Afam region some 350 km of Abuja, the capital of Nigeria.
The Nigerian government plans to build many more power plants in the country because the current power plants can only meet 40 percent of total demand for power in the country, which is not enough to back up the development of national industrial projects and upgrade the livelihood for people. Daewoo E & C has been put in a good position to win additional orders by clinching the Afam power plant project and when the project is completed successfully.
The company's orders last year totaled 8.19 trillion won, up 46.4 percent from the previous year with total sales amounting to 5.07 trillion won.
Daewoo E & C will continue to secure a sound base for winning orders overseas through the stable management of all aspects of construction including civil engineering, construction, plant, housing and others with the expansion in investment in civil engineering projects and plant construction projects. nw

Yoon Kook-jin, chief of Daewoo E&C Overseas Business Division

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