THIRD ANIMP CONSTRUCTION CONFERENCE & ECI AUTUMN FORUM
Milan. Italy, October 12th, 2012
PUSHING THE LIMITS OF ENGINEERING CONSTRUCTION
SOUTH KOREAN COMPANY STRATEGIES
For
OVERSEAS CONSTRUCTION
A.COLADARCE (ABB)
THIRD ANIMP CONSTRUCTION CONFERENCE & ECI AUTUMN FORUM
Milan. Italy, October 12th, 2012
PUSHING THE LIMITS OF ENGINEERING CONSTRUCTION
INDEX
• Foreword
• Who are the «magic» five Koreans.
• GCC projects awarded for Oil & Gas onshore.
• Artificial reasons for Koreans competition success.
• Reality.
• Subcontracting strategy & matrices.
• What future?
THIRD ANIMP CONSTRUCTION CONFERENCE & ECI AUTUMN FORUM
Milan. Italy, October 12th, 2012
PUSHING THE LIMITS OF ENGINEERING CONSTRUCTION
VERSUS
Years 2009 onwards: the
attack to ROW EPC!!
THIRD ANIMP CONSTRUCTION CONFERENCE & ECI AUTUMN FORUM
Milan. Italy, October 12th, 2012
PUSHING THE LIMITS OF ENGINEERING CONSTRUCTION
FOREWORD
For last year ANIMP Conference, BAIN & Co. compared Italian EP&C
Contractors and Manufacturers competitivity vs Koreans for the Oil & Gas
business.
I guess more than one guy present here has enrolled somebody to «spy»
Koreans working side by side to his organization or out of the fence of one of their
mega projects where they are completely alone….to grasp some secrets of their
winning execution strategy.
In the following slides I’ve collected findings of this watching activity from their
outside construction or plant fences; opinions of final Owners and PMCs; data
from Project Control specialists mobilized on site; Subcontractors judgements,
etc.
THIRD ANIMP CONSTRUCTION CONFERENCE & ECI AUTUMN FORUM
Milan. Italy, October 12th, 2012
PUSHING THE LIMITS OF ENGINEERING CONSTRUCTION
GCC O&Gas ON SHORE PROJECTS (Chrono) 1/6
Country Project name Package
Value
(Billions
Euros)
EPC Contractor EPC based in
K.S.A. Manifa Oil field
Utility 1,32 JGC Japan
Process 1,32 Snamprogetti Italy
Kuwait Al Zour Oil Refinery
Offshore facilities 0,76 Hyunday Korea
Process 2,72 JGC/GS Japan/Korea
Desulphurization 1,36 SK Korea
Tank farm 0,82 Daelim Korea
Utilities 1,36 Fluor USA
THIRD ANIMP CONSTRUCTION CONFERENCE & ECI AUTUMN FORUM
Milan. Italy, October 12th, 2012
PUSHING THE LIMITS OF ENGINEERING CONSTRUCTION
GCC O&Gas ON SHORE PROJECTS (Chrono) 2/6
Country Project name Package Value EPC Contr. EPC based in
UAE Habshan Gas Gas processing
3,37 JGC/Tecnimont Japan/Italy
KSA Jubail Export
Refinery (JER)
Aromatics (#3) 0,50 Samsung Korea
Utilities (#5B) 0,30 SK Korea
Interconnecting (#5A) 1,00 Technip Italy
Process Unit #2A 1,22 Technip Italy
Process Units #1 0,86 Tecnicas Reunidas Spain
Tank farm port 0,53 Rotary Singapore
Tank farm plant 0,18 Punj Lloyd India
Process Unit #4 0,57 Chyoda/Samsung Japan/Korea
Process Units #2B 0,65 Daelim Korea
THIRD ANIMP CONSTRUCTION CONFERENCE & ECI AUTUMN FORUM
Milan. Italy, October 12th, 2012
PUSHING THE LIMITS OF ENGINEERING CONSTRUCTION
GCC O&Gas ON SHORE PROJECTS (Chrono) 3/6
GCC O&Gas ON SHORE PROJECTS (Chrono) 1/
Country Project name Package Value EPC Contr. EPC based in
UAE Habshan gas
Offshore facilities 1,22 Hyunday Korea
NGL Recovery 1,51 GS / Petrofac Korea/UK
Tank Farm 0,38 CB&I USA
UAE Das Island Project Gas processing
0,72 Hyunday Korea
UAE Ruwais Refinery
Expansion
Utilities 1,96 Samsung Korea
CDU 1,52 SK Korea
RFCC 2,23 GS Korea
Crude Oil Storage 0,84 Daewoo Korea
Offshore facilities 0,37 GS Korea
UAE Ruwais LNG NGL Recovery
1,43 GS / Petrofac Korea/UK
THIRD ANIMP CONSTRUCTION CONFERENCE & ECI AUTUMN FORUM
Milan. Italy, October 12th, 2012
PUSHING THE LIMITS OF ENGINEERING CONSTRUCTION
GCC O&Gas ON SHORE PROJECTS (Chrono) 4/6
GCC O&Gas ON SHORE PROJECTS (Chrono) 1/
Country Project name Package Value EPC Contr. EPC based in
Qatar Barzan Gas Proj. Gas processing
1,72 JGC Japan
K.S.A. Wasit Gas Plant
(onshore)
Inlet & Gas Processing 0,73 SK Korea
Power Plant 0,45 Samsung Korea
NGL Fractionation 0,23 SK Korea
SRU 0,45 Jacobs / SK USA/Korea
K.S.A. Shaybah LNG
Inlet & Gas Processing 0,75
Samsung Korea
NGL Recovery/Utilities 0,75
Power Plant 0,30
Increased Gas Process. 0,27
Residential 0,11 MMG K.S.A.
THIRD ANIMP CONSTRUCTION CONFERENCE & ECI AUTUMN FORUM
Milan. Italy, October 12th, 2012
PUSHING THE LIMITS OF ENGINEERING CONSTRUCTION
GCC O&Gas ON SHORE PROJECTS (Chrono) 5/6
GCC O&Gas ON SHORE PROJECTS (Chrono) 1/
Country Project name Package Value EPC Contr. EPC based in
UAE Ruwais Clean Diesel Process unit
8,59 GS Korea
K.S.A. Yanbu Oil Refinery
(YERP)
Process Units #1 0,58 Tecnicas Reunidas Spain
Process Units #2 0,45 SK Korea
Process Units #3 0,90 Daelim Korea
Process Units #4 0,53 Daelim Korea
Tank farm 0,30 ENNPI Egypt
Pipelines 0,08 Punj Lloyd India
Solids Handling 0,19 Techint Italy
Interconnecting 0,17 MMG K.S.A.
Offsites & Utilities 0,75 KBR USA
THIRD ANIMP CONSTRUCTION CONFERENCE & ECI AUTUMN FORUM
Milan. Italy, October 12th, 2012
PUSHING THE LIMITS OF ENGINEERING CONSTRUCTION
GCC O&Gas ON SHORE PROJECTS (Chrono) 6/ 6
GCC O&Gas ON SHORE PROJECTS (Chrono) 1/
Country Project name Package Value EPC Contr. EPC based in
UAE Borouge
Petrochemical
Ethane Cracker 0,81 Linde Germany
PP PE 1,24 Samsung /Tecnimont Korea/Italy
Utilities 0,71 Hyunday Korea
UAE Shah Gas Proj
Offshore facilities 1,13 Samsung Korea
Gas Processing 2,64 Saipem Italy
The «Magic 5» got 33,0
Billions Euro out of 55,9 Bl. in
GCC (2009-2010)
THIRD ANIMP CONSTRUCTION CONFERENCE & ECI AUTUMN FORUM
Milan. Italy, October 12th, 2012
PUSHING THE LIMITS OF ENGINEERING CONSTRUCTION
WHAT RESTS TO THE REST OF THE WORLD IN GCC
THIRD ANIMP CONSTRUCTION CONFERENCE & ECI AUTUMN FORUM
Milan. Italy, October 12th, 2012
PUSHING THE LIMITS OF ENGINEERING CONSTRUCTION
ARTIFICIAL REASONS FOR KOREAN COMPETITION
SUCCESS.
• KOREANS HAVE HAD A VERY FAVOURABLE KWON DEPRECIATION
AGAINST USD.
• YOU NEVER ENCOUNTER ONE KOREAN ONLY, AGAINST ROW
CONTRACTORS:
o MULTI ATTENDANCE TO TENDERS
o PRE-AGREEMENT TO WHO WILL BE THE WINNER OF THE FLOCK
(I.E. NO DIRECT COMPETITION BUT MUTUAL SUPPORT TO
VARIOUS TENDERS LIMITING ALSO THE ACCESS TO ROW
CONTRACTORS
• K. EXPORT OVERPRODUCTION OF DOMESTIC MANUFACTURERS.
• KOREANS DO EVERYTHING ON DIRECT HIRE OR UTILIZE DOMESTIC
SUBCS HIDDEN UNDER THEIR HATS.
THIRD ANIMP CONSTRUCTION CONFERENCE & ECI AUTUMN FORUM
Milan. Italy, October 12th, 2012
PUSHING THE LIMITS OF ENGINEERING CONSTRUCTION
REALITY
• KOREANS MEET THE FINAL OWNER GOALS: SIMPLE & CHEAP PLANTS
IN A SHORT SCHEDULE.
• THEY COMPETE EACH OTHER AND BEING LISTED IN SEOUL, THE
FINANCIAL MARKET EXPECTS THEM TO CONTINUE TO REPORT
STRONG REVENUES GROWTH AND GOOD MARGINS FROM ONE YEAR
TO THE FOLLOWING ONE.
• THEY COMPLETE PROCUREMENT (60%-95%) EARLIER THAN ROW AND
THIS APPLIES BOTH FOR PROCESS OR INTERC. UNITS: FROM 2 TO 5
MONTHS >>> Some evidences from JERP or YERP.
• THEIR SITE CONSTRUCTION IS VERY STRONG IN THE PROPOSAL DEP.T
(DURING TENDERING PHASE) AND IN THE EXPEDITERS/INSPECTORS AT
HOME/FABRICATION PLACES.
THIRD ANIMP CONSTRUCTION CONFERENCE & ECI AUTUMN FORUM
Milan. Italy, October 12th, 2012
PUSHING THE LIMITS OF ENGINEERING CONSTRUCTION
REALITY (continued 2)
• KOREANS SELDOM RE-SCHEDULE CONSTRUCTION: COMPETENCY &
PRAGMATISM MAKE THEM VERY ADHERENT (WOULD SAY «BONDED»!) TO
PLANNED CURVES.
• STILL AT SITE:
o THEY START ACTIVITIES ON A RECORD TIME (RARELY AFTER M. 5).
o THEY RAMP MANPOWER PEAKS FASTER THAN ANYBODY OF ROW .
o THEY VERY SELDOM ARE WRONG ON EFFICIENCY (MANHOURS SPENT
VERSUS MANHOURS PLANNED). KOREANS SUBCONTRACT TO LOCAL
ENTITIES AS MUCH AS THEY CAN, NEVER UTILIZE A GENERAL
CONSTRUCTION CONTRACTOR FOR THE ENTIRE CONSTRUCTION
EFFORT, OFTEN SUBCONTRACT TO SPECIALISED (& FIDELISED)
KOREAN FIRMS WITH BOTH DOMESTIC AND INTERNATIONAL
EXPERIENCE.
THIRD ANIMP CONSTRUCTION CONFERENCE & ECI AUTUMN FORUM
Milan. Italy, October 12th, 2012
PUSHING THE LIMITS OF ENGINEERING CONSTRUCTION
REALITY (continued 3)
• THEY PREPARE ONE HELL OF A WORK DURING TENDER
PHASE.
• THEIR SUBCONTRACTORS ARE HAPPY TO WORK WITHIN
THEIR ENVIRONMENT (UNIT PRICES BASED, WITH
STRONG COMMITTMENT TO DELIVERABLE AND
DELIVERIES ROS DATES).
• ONCE KOREANS WANTS TO GROW IN COMPETITION THEY
ARE NOT RELUCTANT TO HAVE AN HIGH PROPORTION OF
FIXED COSTS LIKE ROW: THEY BRING THEIR OWN
CONSTRUCTION EQUIPMENT FLEET OR PREFER TO
DIRECTLY HIRE MANPOWER.
THIRD ANIMP CONSTRUCTION CONFERENCE & ECI AUTUMN FORUM
Milan. Italy, October 12th, 2012
PUSHING THE LIMITS OF ENGINEERING CONSTRUCTION
SUBCONTRACTING STRATEGY
PROJECT ORGANIZATION (Home Office)
FULLY EMPOWERED SITE ORGANIZATION
LOC
SUBC 1
LOC
SUBC 5
LOC
SUBC 2
LOC
SUBC 6
LOC
SUBC 3
LOC
SUBC 7
LOC
SUBC 4
KOREAN
B.UP
SUBC 2
KOREAN
B.UP
SUBC 1
PROJECT ORGANIZATION (Home Office)
SITE ORGANIZATION
LOCAL/INTERNATIONAL
GENERAL CONSTRUCT.
SUBC.
LOC
SUBC 1
LOC
SUBC 2
LOC
SUBC 3
LOC
SUBC 4
THIRD ANIMP CONSTRUCTION CONFERENCE & ECI AUTUMN FORUM
Milan. Italy, October 12th, 2012
PUSHING THE LIMITS OF ENGINEERING CONSTRUCTION
SUBCONTRACTING MATRIX
PK 1
EC/DMC
PK 2
DPC
PK 3
Tank Farm
PK 4
PC
PK 5
HDPE
Piling BOWON LEE CHUNJO BOWON LEE
Civil Works
AL SUWAIDI
KETTANEH
Buildings (Arch) AL MISHAL
Underground KETTANEH
Tank
Fabric/Erection DOOSAN MECATEC NOT APPLICABLE NOT APPLICABLE
Piping Shop Fab
AL SUWAIDI TCC AL SUWAIDI TCC
Steel Structure /
Equipment
Erection
A G Piping
Electrical
Instrumentation
Heavy Rigging CHUNJO
Insulation AL SUWAIDI TCC AL SUWAIDI
BINZAGR
Painting TCC
SAUDI KAYAN construction execution period Feb 2007 - May 2010 (HDPE Aug 2008 - Oct 2010)
THIRD ANIMP CONSTRUCTION CONFERENCE & ECI AUTUMN FORUM
Milan. Italy, October 12th, 2012
PUSHING THE LIMITS OF ENGINEERING CONSTRUCTION
SUBCONTRACTING MATRIX SATORP JERP
PK 1
TECNICAS
REUNIDAS
PK 2A
TECHNIP
PK 2B
DAELIM
PK 3
SAMSUNG PK 4
CHIYODA/S.SUNG
PK 5A
TECHNIP
PK 5B
SK E&C
Piling not applicable
ASTALDI
not applicable KELLER DYWIDAG JEC not applicable
Civil Works
SIN
OP
EC
(HP
& L
P H
DS
/CD
U/V
DU
/H2)
NS
H (C
DU
/VD
U)
NSH
KCC KETTANEH N
ES
MA
(CO
KE
DR
UM
S
/FU
RN
AC
ES
)
DY
WID
AG
(PR
OC
ES
S
AR
EA
S/L
PG
/M
ER
OX
) CCE
AMANA Buildings (Arch) SARCO
Underground
NSH
Piping Shop Fab SIN
OP
EC
(MH
C /D
HC
)
NE
SM
A (F
CC
/AL
KY
)
MMG
SA
MS
UN
G
(AR
OM
AT
ICS
)
SU
NG
CH
AN
G
(PA
RA
XIL
EN
E)
NESMA
AMANA /
L&T
Steel Structure /
Equipment
Erection NCC
A G Piping AIC
Electrical
JAL CARLO GAVAZZI CARLO
GAVAZZI
CARLO
GAVAZZI Instrumentation
Heavy Rigging MAMMOET MAMMOET ALE
MAMMOET
MAMMOET SARENS MAMMOET
Haulage/
transport FAGIOLI FAGIOLI FAGIOLI FAGIOLI FAGIOLI FAGIOLI
TOTAL 4 SUBCs TOTAL 5 SUBCs TOTAL 6 SUBCs TOTAL 6 SUBCs TOTAL 6 SUBCs TOTAL 6
SUBCs
TOTAL 9
SUBCs
THIRD ANIMP CONSTRUCTION CONFERENCE & ECI AUTUMN FORUM
Milan. Italy, October 12th, 2012
PUSHING THE LIMITS OF ENGINEERING CONSTRUCTION
SUBCONTRACTING MATRIX SHAYBAH LNG
PK 1
Inlet & Gas
Treatment Plant
PK 2
NGL Recovery &
Utilities
PK 3
Power Plant Pack 4a Gas Handling
GOSP 1 & 4
Pack 4b gas Handling
GOSP 2 & 3
PK 5
Residential &
Industrial
Civil Works
GUSAN
GUSAN
KAMCO
Mohammad Al Mojil
Group (MMG)
Buildings (Arch)
Buildings
(Precast const) Ranco & Zamil Ranco & Zamil
Underground GIWI TCC PTS Chelsea
Piping Shop Fab Hajri
Samsung Saudi
Arabia
Fabrication Shop
ARCC not applicable
Steel Structure /
Equipment
Erection GIWI TCC SUNGDO E&C JCC Sung Chang
not applicable
A G Piping not applicable
Electrical
SAMYOUNG SEJONG MIDONG Carlo Gavazzi
not applicable
Instrumentation not applicable
Heavy Rigging Mammoet not applicable
Insulation RB Hilton Bin Zagr RB Hilton TBD not applicable
Painting RB Hilton Hajri RB Hilton TBD not applicable
THIRD ANIMP CONSTRUCTION CONFERENCE & ECI AUTUMN FORUM
Milan. Italy, October 12th, 2012
PUSHING THE LIMITS OF ENGINEERING CONSTRUCTION
WHAT FUTURE?
• KOREANS DIVERSIFYING INTO REGIONS AND FIELDS?
• FEED EXPERTS?
• WHAT ELSE?
Q & A SESSION