DL E&C Establishes Differentiated Competitiveness in the Russian Market, a New Breakthrough of K-construction
DATE 2021.12.30
VIEW 1081
DL E&C Establishes Differentiated Competitiveness in the Russian Market,
a New Breakthrough of K-construction
a New Breakthrough of K-construction
DL E&C won a mega chemical plant project in Russia, a new overseas market for the company. On December 30, 2021, DL E&C announced that it signed an agreement for the KRW 1.6 trillion (EUR 1.17 billion) Russian Baltic Complex Project. DL E&C will be in charge of design and procurement of equipment and materials.
The project involves building the world’s largest polymer plant based on a single line in the Ust-Luga region, 100km southwest from Saint Petersburg. The plant can produce 3 million tons of polyethylene, 120,000 tons of butene, and 50,000 tons of hexene annually. Ust-Luga is one of Russia’s major port cities located on the Gulf of Finland, and large-scale investments are currently underway. The building of Russia’s largest gas and chemical compound complex producing LNG and chemical products by processing 45 billion㎥ of natural gas is in the works.
Winning the project is meaningful since DL E&C did so in competition with advanced European construction companies. The reason is that its technological capabilities have been recognized in Russia, a huge client in the global petrochemical market. DL E&C expects additional orders in Russia based on its differentiated competitiveness.
DL E&C Wins the Project in Competition with Advanced European Companies using Basic Design Technological Capabilities and Know-how
DL E&C has been taking charge of the basic design of the project since December 2019. The basic design involves setting the basis design and quotation. The field has been dominated by major European construction companies, but DL E&C has won the project after being recognized for its capabilities by the Russian client.
DL E&C is concentrating its capabilities on winning from the basic design to the main construction. When a company participates in basic design, difficulties predicted in the main construction can be identified. Through this, risks associated with the project can be managed in advance. The company can secure in advance a favorable position in winning the main construction through maximization of efficiency and profitability with optimal detailed design.
DL E&C is also performing the basic design of a mega methanol plant built by Swiss global fertilizer manufacturer Eurocam in the Ust-Luga region and the basic design of a polypropylene plant propelled by Russian petroleum company LUKoil. Through the Baltic Project, DL E&C has proven its EPC winning competitiveness based on the basic design, so it expects to win an additional order from the project for which it carries out basic design.
DL E&C Establishes Differentiated Competitiveness in the Russian Market, a New Breakthrough of K-construction
As the world’s largest natural gas reserve holder and one of the top three global oil-producing countries, Russia plans to develop 15 billion㎥<?> of oil deposits and 100 trillion㎥ of natural gas in the North Pole. DL E&C has been paying attention to Russia’s potential for market diversification. The company established a local subsidiary in 2015 and launched market development in full swing.
Russia is much different from the Middle Eastern and Asian regions, where Korean construction companies have paid attention so far in terms of climate conditions. Due to language and technical barriers, Russia was a difficult market to enter. DL E&C experienced various trials and errors in the initial stage but has accumulated achievements by participating in various projects including gas, oil refining, and petrochemical projects. In 2016, DL E&C entered the basic design field that has been dominated by advanced European construction companies. The company is coming to fruition, having won a Moscow Oil Refinery Project and this project early this year.
DL E&C expects to win additional orders through human resources, know-how, and business capabilities accumulated in the Russian market. Through bold entry into new market beyond the red ocean where the competition is fierce, DL E&C plans to expand growth and profitability simultaneously. The company posted the highest operating profit ratio at 14.3% in Q3 in the construction industry, having ensured stable earnings structure with profitability-centered selective orders. The company’s rapid growth is expected if superior large orders can be won.
“Winning this project is very meaningful in the Russian market, which has been regarded as a barrier that is difficult for Korean construction companies to overcome. We will robustly establish differentiated competitiveness in the Russian market, which is forecast to expand, through reinforcement of digital innovation and BIM-based capabilities,” DL E&C Plant Business Division Director Yu Jae-ho stressed.
