The South Korean government, public institutions, and a company formed a "Team Korea" to win a large-scale order worth $2.8 billion (about 4 trillion won) in the U.S. offshore plant market. Going beyond simple construction, the project is evaluated as a case marking a paradigm shift in the overseas construction industry through a complex business model encompassing investment, construction, and operation.
The Ministry of Land, Infrastructure and Transport, the Ministry of Climate, Energy and Environment, and the Ministry of Oceans and Fisheries announced Thursday that they had won the "Louisiana FLNG Offshore Plant Unit 1 Construction Project" in the United States on the 1st (local time). FLNG is a floating offshore plant equipped with natural gas liquefaction facilities. Built at a domestic shipyard and installed on-site, it liquefies, stores, and unloads natural gas produced from gas fields.
The project produces about 4.4 million tons of LNG annually in waters about 74 kilometers off the coast of Louisiana. The total project cost is $4.8 billion (about 7 trillion won), and Samsung Heavy Industries (010140.KS) won $2.8 billion in orders by taking on engineering, procurement, and construction (EPC). The construction period is five years, and the operation period is 25 years.
Samsung Heavy Industries has won six of the 10 FLNG orders placed worldwide, with three in operation and three under construction. This additional contract is expected to further solidify its early lead in the FLNG market.
The core of this project is its public-private cooperative financing structure. The Korea Overseas Infrastructure & Urban Development Corporation (KIND) invested $70 million (about 100 billion won), the Green Fund $30 million (about 45 billion won), and the Korea Ocean Business Corporation (KOBC) $50 million (about 75 billion won) in a fund led by BlackRock, the world's largest asset manager. By participating as financial investors and supporting the financial structuring, they backed Samsung Heavy Industries' EPC order.
The government expects this project to serve as a decisive turning point for transforming overseas construction into a high-value-added complex industry, given that it is an investment-development-type project covering the entire process of financing, construction, and operation. As the facilities are manufactured, built, and assembled domestically, the government also forecasts that the project will contribute to revitalizing regional economies through a chain of orders for small and medium-sized enterprises. The government said, "Based on partnerships with global developers, we will actively seek out future collaborative projects."
