GS Engineering and Construction (GS E&C) is enjoying steady growth despite a worldwide slump in the transportation, energy and environmental infrastructure market. The builder is diversifying its overseas markets into Latin America and Africa beyond the Middle East and Southeast Asia. This is because the contractor is expecting emerging markets such as Asia, Latin America, the Middle East and Africa will grow steadily.
The Plant Business Division of GS E&C, the main business of which is the oil refinery and petrochemical sectors, is going ahead with advancements into new sectors such as non-traditional oil such as oil sand, LNG Liquefaction and Gasification. Last year, the company signed a project to develop oil sand in Canada.
These efforts paid off, with the succeeding in making forays into new business sectors in new markets, such as a US$310 million Canadian oil sand project and a US$2.6 billion urea fertilizer plant construction project in Australia which includes the gasification sector.
On June 9, GS E&C received a Notification of Award (NOA) for a 620 billion won LPG storage tank construction project from the Kuwait National Petroleum Company. The order was evaluated to be more valuable as the company won the order at a time when experts expected incidents in the Middle East to have a negative impact on the overseas plant business of Korean builders.
In 2008, GS E&C advanced into the overseas LNG receiving terminal construction business by winning an order to build a PTT LNG receiving terminal from Thailand, the first time for a Korean builder. Since then, GS E&C has been cementing its position as the leader in the gas plant sector, a blue-ocean item.
The gas plant sector had been dominated by a few European and Japanese companies. Previously, Korean companies were only able to participate in subcontracting projects for such companies or not-so-important projects. GS E&C succeeded in numerous major gas plant projects by carrying out large-scaled projects successfully in the Middle East, proving its strong technological power and sincerity.
GS E&C is continuing its growth in the gas plant sector, a future growth engine. The company received a US2.2 billion order to build natural gas facilities in the United Arab Emirates in July 2009, as well as an order to construct a US$264 million SNDC Gas Plant in Oman in December of the same year. These orders mean that GS E&C has secured a footing in the lucrative gas plant market.
GS E&C has mapped out a plan to focus more on the gas plant sector this year. To this end, the company will increase its design capabilities of core processes, such as LNG liquefaction, by joining forces with leading overseas companies.
Furthermore, in terms of business type, GS E&C will promote the planning/proposal-type business and development-type business, including finance and investment, by veering away from EPC-oriented subcontracting work. As a result, the company expects to be able to strengthen its independent business abilities in the overseas market.
“It is expected that GS E&C will win orders to construct an LPG tank terminal and a water supply facility from Kuwait in March, an order to build a petrochemical plant from Uzbekistan and an order to build a power plant in Brazil in April and May,” Hana Daetu Securities announced recently. “The contractor will secure US$5 billion in overseas orders in the first half of this year.”
“Political situations in the Middle East are currently slightly unstable. However, such situations can cause political leaders to attempt to show economic achievement by pushing for big projects,” said Huh Myung-soo, president of GS E&C, adding, “This can provide Korean companies with good opportunities.”