The SMDC joint venture, in which Daewoo E&C participates, has been selected as the midstream EPC (Engineering, Procurement and Construction) contractor for the Rovuma LNG Phase 1 project, a massive liquefied natural gas (LNG) development in Mozambique. The project has a production capacity of 18.6 million tonnes of LNG per year, and Korea Gas Corporation reportedly holds a 10% ownership stake in the project.
Daewoo E&C announced on August 5 that it had officially received a Letter of Intent (LOI) from ExxonMobil Mozambique, the lead company representing the Rovuma LNG Phase 1 project sponsors, to carry out pre-FEED design, procurement and constructability review work. Daewoo E&C is reported to participate as the main contractor through the SMDC joint venture, formed together with Italy’s Saipem, the United States’ McDermott, and China Petroleum Engineering & Construction Corporation (CPECC). The LOI is intended to advance detailed design, procure key equipment, and conduct constructability reviews ahead of full-scale construction, which is expected to follow a Final Investment Decision (FID). ExxonMobil Mozambique plans to complete the FID by the end of this year and proceed to signing the full EPC contract and beginning construction, it is reported. The project is being developed as an e-driven (electric-driven) LNG liquefaction plant, which will also include a large-scale combined-cycle gas power plant to supply electricity, along with other supporting facilities, according to reports.
The overseas LNG liquefaction plant construction market has reportedly long been dominated by a small number of global contractors, including the United States’ Bechtel and McDermott, Japan’s JGC and Chiyoda, and Italy’s Saipem, given the highly demanding technology and construction capability required for extreme low-temperature process control. As a result, Korean construction firms have reportedly participated mainly as subcontractors in the construction segment. Daewoo E&C is reported to have previously formed a consortium with leading global EPC firms in Nigeria in 2020, becoming the first Korean construction company to secure main-contractor status and lead the Nigeria LNG Train 7 project.
Implications for Korea’s Industry
Daewoo E&C stated that receiving this LOI once again demonstrates that the company has moved beyond the limitations of being a subcontractor and has been recognized for its capability to lead projects alongside top-tier global EPC firms. It is also notable that Korea Gas Corporation participates in the project owner consortium with a 10% equity stake, meaning Korean firms are involved on both the construction and equity investment sides. Daewoo E&C is reported to have built 25 LNG storage tanks domestically and to have demonstrated its technical and construction capabilities overseas in Papua New Guinea, Sakhalin and Nigeria.
Whether the sponsor’s Final Investment Decision, expected by the end of this year, proceeds as planned and leads to the full EPC contract is seen as the key point to watch. Daewoo E&C said it plans to actively pursue further opportunities in global energy infrastructure markets including Papua New Guinea, the Middle East, Southeast Asia and North America.