SK E&C inks MOU to build natural gas liquefaction plant in U.S.

By 정주원
  • Published : Feb 11, 2014 - 14:29
  • Updated : Feb 11, 2014 - 14:43

SK Engineering and Construction Co. said Tuesday it reached a tentative deal to build a

natural gas liquefaction plant in the United States, marking the first time for a South Korean company to enter the business sector.

The memorandum of understanding reached with Australia's Magnolia LNG calls for building a 3.4-million-ton capacity liquefaction plant on the banks of Lake Charles in Louisiana. Liquefaction plants handle pretreatment, natural gas liquid recovery, a liquefaction process and storage for the liquefied natural gas.

The project for the mid-size plant is estimated to be worth $1.57 billion with work to start after SK E&C and Magnolia sign a formal agreement early next year. The two partners are expected to hold talks on the verification of basic Front-End Engineering Design and calculating the cost for the engineering, procurement and construction part of the project.

"A formal deal will mark the first time that a local builder secures an EPC order for natural gas liquefaction," the company said in a statement. South Korean builders have generally not engaged in this kind of work because the country does not have any gas wells.

The deal could be the start of South Korean companies entering the global liquefaction plant construction market that has been controlled by a handful of companies with critical source technology, such as APCI and ConocoPhillips Co., the builder said.

SK E&C, the eighth-largest builder in the country, claimed it has gained prior experience by engaging in a FEED project for a liquefaction plant in Australia in 2008. It said technology developed at the time has been credited for simplifying production and reducing overall investment costs.

The company said with some 1,300 undeveloped gas wells with commercial potential around the world, there is expected to be a rise in orders for liquefaction plants. (Yonhap)