|South Korea ? Turkmenistan Summit Strengthens Diplomatic Ties LGI ? Hyundai Engineering Consortium to Expect KRW 5 Trillion Plant Orders in Turkmenistan|
|Date : 2015-04-21 | View : 15,226|
South Korea – Turkmenistan Summit Strengthens Diplomatic Ties
The LGI-Hyundai Engineering Co. (HEC) consortium has virtually won KRW 5 trillion worth of projects in Turkmenistan, including the modernization of its oil refinery plants, and the construction of gas-to-liquid (GTL) plants.
Last June, President Park Geun-hye visited three CIS nations (Uzbekistan, Turkmenistan, and Kazakhstan) in a bid to take a Eurasia initiative, which resulted in two leading Korean companies winning large scale orders from the CIS.
■ During Turkmenistan President’s visit to South Korea, one agreement and one MOU were signed
Upon Turkmenistan President Gurbanguly Berdimuhamedow’s visit to South Korea, LGI and HEC announced that they will sign an agreement with Turkmenistan's state petroleum company involving a USD 940 million (KRW 990 billion) project to modernize oil refinery plants in Turkmenistan.
Moreover, the consortium stated that it will sign a framework agreement with Turkmenistan’s state gas company to pursue a USD 3.89 billion (KRW 4.08 trillion) project to construct gas-to-liquid (GTL) plants.
Under the modernization of oil refineries, facilities will be constructed in existing plants, located 500 km northwest from the country’s capital of Ashgabat, to remove sulfur from gasoline and diesel. The project will take 42 months.
This deal is a follow-up project after the consortium won the oil refinery plant order in 2012, and has since been completing the project in Türkmenbaşy, attesting to the country’s trust in the consortium’s capabilities.
The GTL plant project will construct facilities to process 3.5 billion ㎥ of natural gas a year near the capital of Ashgabat and produce diesel and naphtha. The project will take 63 months.
The GTL project aims to produce clean, refined oil products from gas, and, as such, only a limited number of foreign companies have participated in such undertakings. LGI expects to spearhead this project, and further boost its competitiveness.
■ Yet another substantial business success from President Park’s Eurasia initiative
This project blossomed after President Park visited Turkmenistan last June.
At the summit with Turkmenistan President Gurbanguly Berdimuhamedow, President Park Geun-hye discussed collaborative projects between the two countries, and both governments’ positive support for South Korean companies operating in Turkmenistan. Symbolically important is the first time that a South Korean president has visited Turkmenistan.
Thus, with the two leaders in attendance during their summit in Turkmenistan, LGI and HEC were able to sign MOUs on GTL plants and a second gas petroleum chemistry plant project. The second gas petroleum chemistry plant project was discussed after the consortium submitted a preliminary proposal.
In the meantime, the South Korean government sent a private sector-government economic collaboration delegation to Turkmenistan last month to further boost the economic collaboration between the two countries. The delegation will comprise of 30 personnel from the Ministry of Trade, Industry and Energy, the Ministry of Foreign Affairs, and the Ministry of Land, Infrastructure and Transport, Korea International Trade Association, Korea Institute of Industrial Technology, Korea EXIM Bank, and other private companies.
Prior to such development, HEC signed an agreement involving a USD 2.66 billion project to construct the Kandym gas treatment plants in Uzbekistan earlier this year.
This deal was revived just as President Park Geun-hye, during her summit with Uzbekistan President Islam Karimov as part of her visit to the three Central Asian nations, requested to pursue the project.
Attending the agreement signing ceremony in Uzbekistan were a large number of local government officials, with the local state broadcaster covering this event. As such, the deal was a product of the South Korea-Uzbekistan summit, and was highlighted as an exemplary private sector-government economic initiative.
■ LGI-HEC become strong players in the Central Asia plant markets
The LGI-HEC consortium has established itself as a frontrunner in the plant project sector in Turkmenistan.
The consortium was established in 2009 with a USD 1.4 billion gas desulfurization project in Galkynysh. It continued to secure a USD 530 million oil refinery plant project in Türkmenbaşy in 2012, a USD 240 million crude oil treatment plant project in Kiyanly in 2014, and a USD 3.44 billion petrochemical plant project.
Likewise, HEC successfully won a second project deal in Central Asia in the same year.
HEC is currently the largest cumulative order winner in Central Asia among Korean construction companies.
As of the end of last year, HEC’s projects in Central Asia include five projects in Uzbekistan worth USD 4.12 billion, four projects in Turkmenistan worth USD 3.61 billion, and two projects in Kazakhstan worth USD 970 million, totaling 11 projects worth USD 8.7 billion.
Central Asian nations have achieved rapid economic growth with its huge natural resource reserves after the 2000s, drawing attention as an emerging market for engineering industries. When there was a crisis as a result of competing for low-price orders in the Middle East and Asia, even world-class corporations were reluctant to enter the blue ocean markets of Central Asia due to political instability, lack of security, and sloppy infrastructure.
HEC, however, noticed the potential of Central Asia’s plant markets early on, and positively explored the region’s markets that were not yet developed by the domestic plant industry.
In particular, Turkmenistan was found to have a huge reserve of natural gas, ranking 4thin the world, enabling it to achieve an 8.5% economic growth this year and earning a reputation as a super high-speed growth nation.
HEC is determined to continue to win project orders in the resource-rich Central Asia to remain competitive in such hub markets.
An HEC official said, “With the government's positive diplomatic efforts, locally recognized HEC’s technology, and LGI’s marketing excellence, we are winning large-scale orders in Central Asia. We will continue to expand our businesses in the region to turn it into a major business area and secure project orders not only for HEC but for other Korean companies as well.”
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