Samsung Engineering Secures Largest Plant Order Worth 4.5 Trillion KRW in Mexico Since Inception

[Asia Economy Reporter Ki-min Lee] Samsung Engineering has secured its largest-ever project since its founding, a mega project worth approximately 4.5 trillion KRW in Mexico.

Samsung Engineering announced on the 30th that it received a notice of award on the 28th (local time) from PTI-ID, a subsidiary of Mexico's state-owned oil company PEMEX, for the EPC (Engineering, Procurement, and Construction) of Packages 2 and 3 of the 'Dos Bocas Refinery Project.' The contract amount is $3.65 billion USD (about 4.1 trillion KRW), and when combined with the basic engineering (FEED) and preliminary work costs carried out since last year, the total reaches $3.94 billion USD (about 4.5 trillion KRW), marking the largest single project order in Samsung Engineering's history.

This project is being carried out in the Dos Bocas area of Tabasco state in eastern Mexico and involves constructing crude oil production facilities with a capacity of 340,000 barrels per day. Samsung Engineering will be responsible for the EPC of Package 2 (four units including diesel hydrodesulfurization facilities) and Package 3 (heavy oil catalytic cracking process facilities) out of a total of six packages.

Samsung Engineering's strategy of linking FEED and EPC played a crucial role in securing this order. In particular, FEED is the task of defining the overall framework of the plant, where design expertise and experience are very important. Samsung Engineering won the FEED contract for this project last year and has proactively carried out detailed design, major equipment procurement, and site foundation work to ensure smooth project progress. Based on the project understanding accumulated through FEED, Samsung Engineering expects to successfully execute the EPC as well.

Moreover, the long-standing partnership between Samsung Engineering and PEMEX is also known to have significantly influenced this order. Since 2000, Samsung Engineering has maintained a 20-year relationship with PEMEX, securing six PEMEX-related projects totaling approximately 5.5 trillion KRW, thereby accumulating relevant experience. Notably, unlike the typical EPC turnkey contract method, this project involved continuous collaboration and communication between PEMEX and Samsung through a joint bid calculation (OBCE) approach, Samsung Engineering explained.

A Samsung Engineering official stated, "This order is based on Samsung Engineering's design technology competitiveness accumulated over a long period," adding, "We will leverage our refining project expertise and experience in the Mexican market to successfully lead this project."

With this order, Samsung Engineering's backlog has increased to about 16 trillion KRW. This corresponds to approximately two years and six months of work based on 2019 sales of 6.4 trillion KRW. This is the highest level since 2014, and given the nature of the industry where backlog is reflected in performance such as sales depending on project progress, it is expected that stable performance can be achieved in the future based on this backlog.