Daewoo Engineering & Construction Excels Across All LNG Plant Sectors, Emerging as a Global Energy Construction Leader

[Rebuild K-Construction] Daewoo Engineering & Construction
Key Upstream Facility: CPF
Successful Projects in Nigeria and Beyond
Securing Consecutive Liquefaction Plant Orders
11 Plants Built in Papua New Guinea and Other Countries

Liquefied natural gas (LNG) is considered a bridging energy source as our society transitions from fossil fuels to renewable energy. Compared to traditional fossil fuels such as coal and oil, LNG emits less carbon and fine dust, and it can compensate for the intermittency and volatility that are drawbacks of solar and wind power.

Another advantage is that the existing power grid can be utilized without modification. As the volatility of the global energy market increases due to unexpected variables such as the Russia-Ukraine war, the need to establish stable energy supply chains around the world has grown.

In response to these trends, the domestic construction industry is actively pursuing LNG plant orders. Over the past one to two years, major construction companies have secured basic design contracts overseas, thus building up their track records. Leading the way is Daewoo Engineering & Construction. The company's competitiveness lies in its proven experience across all processes of LNG production. With global LNG demand expected to continue its robust growth for the foreseeable future, there is growing interest in Daewoo Engineering & Construction's expanding LNG plant orders.

A view of the Nigeria LNG Train 7 site under construction by Daewoo Engineering & Construction. Provided by Daewoo Engineering & Construction

The Only Construction Company Capable of Handling All LNG Plant Processes

According to the LNG outlook report released by energy company Shell earlier this year, global LNG consumption is expected to reach 630 million to 718 million tons annually by 2040. This is a 60% increase from last year's annual consumption of 470 million tons. In Asia, where LNG consumption is already high, energy consumption is expected to rise further due to economic growth. In addition, the decarbonization of manufacturing and the advancement of high-tech industries such as artificial intelligence (AI) are likely to further increase consumption.

To meet this demand, it is highly likely that a variety of projects will be initiated over the next five to six years, especially in countries with high natural gas production such as the United States and Qatar. LNG plants are generally divided into three main areas: the "upstream" sector, which involves production; the "midstream" sector, which includes liquefaction, transportation, import, and storage facilities; and the "downstream" sector, which is the final consumption stage. As South Korea is the world's third-largest LNG importer, domestic construction companies have mainly focused on building import and storage terminals, gaining experience in this area. However, in upstream or liquefaction plant projects, which are typically commissioned by LNG-producing countries, Korean construction companies have been considered relatively less competitive.

Despite this environment, Daewoo Engineering & Construction entered global LNG-producing countries early on and built up a solid track record in related projects. Through this, the company has established itself as the only construction firm capable of handling all aspects of LNG plant construction, including central processing facilities (CPF), which are considered the core of LNG plant projects, as well as liquefaction plants and import terminals.

The CPF project is regarded as a key facility in the upstream sector of LNG development. It is a facility that removes impurities and regulates pressure from natural gas extracted from gas fields. Daewoo Engineering & Construction has successfully completed numerous CPF projects, including the Baram Infill, Baram Ubie, and Otumara projects in Nigeria, as well as the Algeria CAFC project. By securing the capability to independently execute engineering, procurement, and construction (EPC) for CPF projects, the company has distinguished itself in the global plant construction market.

A view of the Papua New Guinea LNG plant site constructed by Daewoo Engineering & Construction. Provided by Daewoo Engineering & Construction

Breaking Through the Global Cartel to Win Prime Contracts

The liquefaction plant business is a core sector that accounts for 30-45% of the total cost of LNG development projects. Daewoo Engineering & Construction has also established competitiveness in this field. Over the past 30 years, the company has constructed 11 global liquefaction plants in countries such as Nigeria, Papua New Guinea, Indonesia, Algeria, and Russia. Additional projects are continuously underway.

In the case of the NLNG Train 7 project, which was awarded in Nigeria in 2020, Daewoo Engineering & Construction secured the position of EPC prime contractor, a role that has long been monopolized by a handful of global construction companies. Despite being a latecomer, the company managed to break through a strong cartel and gain recognition for its competitiveness in the global LNG plant market. The EPC business for LNG liquefaction plants is dominated by a cartel of seven companies: Bechtel, McDermott, and KBR from the United States; JGC and Chiyoda from Japan; Saipem from Italy; and Technip Energies from France. In this market environment, Daewoo Engineering & Construction's involvement in the NLNG Train 7 project signifies that it has overcome significant barriers to entry. The company participated as one of the prime contractors, holding a 40% stake in the total project cost of 5.2 trillion won.

A view of the Nigeria LNG Train 7 site constructed by Daewoo Engineering & Construction. Provided by Daewoo Engineering & Construction

In the import and storage facility sector, Daewoo Engineering & Construction has an extensive track record, including the construction of 25 LNG tanks in South Korea, such as the Ulsan North Port Terminal (phases 1-3), Samcheok LNG production base (phase 2), Incheon LNG production base (phase 2), and Tongyeong LNG production base (phases 1 and 2). The company has also built LNG tanks overseas, including in Yemen, accumulating extensive construction experience both domestically and internationally.

A representative from Daewoo Engineering & Construction stated, "LNG is an energy source with low carbon emissions and high demand, making it a sector expected to see continuous growth. Based on our extensive construction experience and technological expertise accumulated worldwide, we aim to establish ourselves as a global leader in the rapidly growing LNG construction business."

This content was produced with the assistance of AI translation services.