SKEC's Seamless Completion of
Desulfurization Facility in Romania

Promises to establish a springboard from the company's potential entry into the plant construction market in Eastern Europe

SK Engineering and Construction (SKEC) has become the first Korean contractor to set its foot in the construction market as it completed a desulfurization facility in Romania after it won the order from the Eastern European country.
A ceremony marking the dedication of FCC Feed Hydrotreating Unit for Arpechim Refinery Complex in Romania was held on May 8 with SKEC Vice Chairman Son Kwan-ho, Gheorghe Constantinescu, CEO of Petrom, the owner of the project, Kim Dae-shik, Korean ambassador to Romania, and Arges Gov. Ion Carstois participating.
Construction of the newly dedicated FCC Feed Hydrotreating Unit began on April 16, 2004 and was complete last March 15. SKEC set a feat of completing the project, some two months prior to schedule without causing industrial accidents.
The FCC Feed Hydrotreating Unit is located within the Arpechim Refinery Complex in Pitesti City on the northwestern outskirts of Bucharest, the capital of Romania.
The $46 million project involved engineering procurement & construction of a desulfurization facility capable of treating 25,000 barrels of crude oil lowering sulfur content to less than 500 ppm.
A SKEC official said, "The successful completion of the project not only demonstrates the Korean contractor's construction prowess, but also establishes a bridgehead in the Eastern European market, and based on the success there, SKEC expects Korea to make another success story in the construction sector in East Europe following that of the Middle East."Take a look into the process of the project, ranging from the awarding of the order on the desulfuriztion facility to completion.
SKEC had to overcome numerous hardships before making the feat of completing a refinery plant project as Korea's first contractor in the Eastern European region.
Even from the time of winning the project, the company faced problems. Prejudice against an Asian contractor was prevalent amongst the conservative European countries. Skeptic views prevailed over awarding the order to a Korean construction company since the project was to be bankrolled by a loan from the European Bank for Reconstruction and Development (EBRD). SKEC was unfavorable because it had to compete with such prominent contractors as Technip, Fluor and Snamprogetti.
However, SKEC began to persuade SNP PETROM S.A, the state-run oil refinery and the owner of the project, stressing technological and faithful execution capabilities it has so far shown in the Middle East, Asia, Central and South America. These efforts paid off: SKEC succeeded in landing the project, beating out European contractors who offered bidding prices showing no differences with SKEC's. The company won the project based on a turn-key method, departing from Romania's precedent of separating design, engineering, procurement and construction in biddings.
A Korean construction company's first entry into the Eastern European market made media headline when the project broke ground.
But as the project proceeded, SKEC suffered difficulties in securing a smooth supply of raw materials and manpower.
Unexpected frequent storms and the cold spell of winter 0nce faced a difficult situation of a failure to meet the completion deadline. In particular, construction was suspended due to the privatization of the project owner SNP PETROM S.A.
SKEC, not satisfied with winning Korea's first order from Eastern Europe, had tided over hardships one after another to make the project a success. The company mobilized insufficient equipment and materials from nearby countries, while it trained local hands to improve their execution capabilities. Workers had to extend working hours to meet the completion deadline and conduct civil works by setting up plastic greenhouses and operating heaters to beat the cold spell.
SKEC's these faithful project execution moved local hands and gained confidence and maintained close ties with the project owner by shortening the completion by two months. An acquisition of SNP PETROM S.A by OMV, the leading oil and gas group in Central Europe and the Austrian refinery company, could offer SKEC a better chance to land additional orders from Europe.
SKEC's successful execution of the plant project for the first time in the Eastern European region promises to establish a springboard from the company's potential entry into the plant construction markets in the Eastern European region, including Romania.
Eastern European countries are likely to modernize their existing plants to cope with European environmental standards. SKEC has been exploring these countries for new orders including Lithuania, Croatia, and Serbia, to step up its operation to make inroads into Eastern Europe with its success in securing the project this time.
SKEC PLANT ENGINEERING & CONSTRUCTION. The company has clinched an order totaling $1.22 billion from Kuwait Oil Company to upgrade crude oil storage and other facilities in Kuwait in 2005. The project is the largest ever won by Korean builders in overseas on a turnkey basis and it is doubly significant because the project is located in Kuwait considered a grave for construction firms.
Following the Kuwaiti order, the company went on to win an order for plant construction from the Aromatic Thailand Public Co. in Thailand, worth $690 million.
The company continues to win projects in the Middle East coming into this year by securing $1.2billion Aromatics Complex project for KPPC (Kuwait Paraxylene Production Company) order in Kuwait.
SKEC started out as Sunkyung Construction in 1977 and the company began its overseas construction business by winning Civil & Architecture project in Saudi Arabia in 1979.
The company changed its name to Sunkyung Engineering and Construction in March, 1984. and the new company set up the engineering department in August of 1984.
While the construction market in the Middle East became sluggish in the second half of 1970, due to the drop in oil prices coupled with downturn in domestic construction market, Sunkyung Construction explored new markets for its services and found in Malaysia in July, 1983 and Indonesia in March 1987 and with them as a stepping stone, the company won the poly-ethylene Terephthalate plant project ordered by Eastman Kodak on a turnkey basis in May, 1991, outbidding such renowned companies as Bechtel of the United States, and Zimmer Co. of Germany.
Following the successful U.S. plant order, the company clinched an oil terminal project worth $40 million from the Petroleum Authority Thailand in September, 1991 on a turnkey basis. The company won a high mark for winning such a complicated project in competition with world-renowned companies.
In 1998, the company changed its name to SK Construction and has emerged as a global firm after winning a $1.6 billion Madero oil refinery complex project in Mexico; It made the list of prime contractors, which is known as an officer's club in the industry in the world. The company completed a $2.6 billion oil refining complex in Mexico, also, which was followed by the Madero project.
In 2001 and 2002, the company signed exclusive contracts for the KNPC project worth $309 million in Kuwait, and KOCRP project for $237 million. It was very unusual for Kuwait to award the projects on exclusive contract basis when the country's regulations required that public projects worth more than $1 million required competitive biddings.
SKEC currently is undertaking 12 projects in 7 countries, solidifying its position as a strong plant contractor. nw

SKEC Vice Chairman Son Kwan-ho

SKEC Vice Chairman Son Kwan-ho, Gheorghe Constantinescu, CEO of Petrom, and other dignitaries on hand at a ceremony marking the dedication of FCC Feed Hydrotreating Unit for Arpechim Refinery Complex in Romania.

A general view of the FCC Feed Hydrotreating Unit for Arpechim Refinery Complex in Romania.