Hunt for African Projects
Daewoo E&C also contracted to build Ganghwa Tidal Power Plant, the biggest in the world
Daewoo Engineering and Construction Co. has only a year left to complete the construction of the Sihwa Lake Tidal Power Plant in Gyeonggi Province, which is the largest such power plant in the world. The tidal power plant, with total power output capacity of 254 Mw when it is completed in August 2010, will overtake the La Rance tidal power plant in France built in 1969 with 240 Mw power generating capacity. The total investment to build the Sihwa plant will be 313.5 billion won and it will create an import offset of 860,000 barrels of oil. It will also cleanse the lake, in addition to generating new recycled energy, as the seawater will be continuously circulated. Daewoo also signed a contract to build a tidal power plant on Ganghwa Island off Incheon last year, giving the company a unique position in the construction of tidal power plants in the country. The projected Ganghwa tidal power plant will be the biggest such power plant in the world with power generating capacity of 812 Mw, three times more than the Sihwa tidal power plant, and it will cost some 2.137 trillion won to build, the company said.
The Ganghwa project involves the construction of a tidal bank linking four islands near Ganghwa Island stretching for 7,795 meters and the installation of 32 power generators with the capacity to generate 25.4 Mw of electricity. The project is to be completed in 2015. The tidal power plant will be able to supply 8.4 percent of the power consumed in Incheon, the company said.
Project orders secured in the second quarter alone amounted to 2.77 trillion won, up 20 percent from the previous quarter, while posting 1.79 trillion won in Q2 sales, up 4.8 percent YoY, with net profit standing at 161.1 billion won, up 149.5 percent YoY, the company said. But operating profit only came to 50.5 billion won during Q2, down 63 percent from the same period last year. Q2 sales, however, increased 16.2 percent from Q1, and net profit rose 1,313.5 percent from Q1, while operating profit was down only 6.5 percent from Q2, showing signs of recovery in the company¡¯s operations in Q2, the company said. President Seo Jong-uk said Daewoo Construction¡¯s share prices are undervalued, adding that there is no other way than to work hard to improve its numbers in major areas of its operations including winning new project orders. The company went to work early this year, winning 1.795 trillion won worth of public projects so far, the tops in the construction industry.
The CEO said Daewoo workers and its corporate culture have a special DNA, which make them stronger during crises. ¡°We have experiences that overcame all types of crises that an average Korean company faced, and we beat them. Daewoo was placed under work-out with the breakup of the Daewoo Group in 1997 when the financial crisis broke out, but the company, in two to three years, managed to come out on top of the industry in many areas of its operations,¡± Seo said.
Daewoo has been constantly on the offensive in the overseas construction market, paying special attention to Africa with Seo touring a number of countries there recently. He said Daewoo has been focused on the Dark Continent while most other construction firms have been caught up with the boom in the Middle East, which has been going on for the past two to three years. The company has received 55 percent, or $16.8 billion, of its overseas orders from African countries. The company so far has been preoccupied with Nigeria and Libya, but its attention is now focused on Algeria, with the 14th largest oil reserves in the world and the ninth largest natural gas reserves.
President Seo feels that many government funded public projects will come out of Algeria from now in such areas as plant and civil engineering and Daewoo is ready to go after them. Seo also said he was concerned that the competition among Korean builders to win construction projects might be getting overheated, resulting in bidding wars, a huge threat to the national interest. He suggested as a solution for them to explore markets in other countries. Seo also said he is very dismayed by the downturn in the housing market, which he blamed on poor predictions of housing demand by the construction industry when the housing market was booming. But he expected the market to begin to perk up in Q4 when the economy emerges from the recession. Daewoo E&C has become a prominent global name in the construction of LNG terminals and related facilities. Since 1990, offering some of the world¡¯s finest technology in the process, the company has undertaken the construction of 12 LNG storage tanks with total storage volume of 1.8 million cubic meters on a turnkey basis. The company has also built more than 1,000 kilometers of gas pipelines and has become one of the world¡¯s largest contractors for LNG plants and gas pipelines, CEO Seo said.
Some of the major projects being undertaken by the company are Phase 2 of the Tongyoung LNG Receiving Terminal with a total capacity of 140,000 kl x three units in Tongyoung, Korea; the Western Libya Gas-WAFA Plant involving the installation of mechanical equipment, instrumentation, electrical utilities, site facilities, concrete structures and gas gathering facilities; the Cawthorne Channel Association Gas Gathering Project in Nigeria, involving the construction of EPC for gas gathering facilities (200MMscf/d of associated gas from three flow stations) and pipeline works (4"-24" x 74 km). nw
An aerial view of a tidal bank along Sihwa Lake where Daewoo E&C is building a tidal power plant with the annual capacity of 254 Mw.