SK Engineering & Construction (SK E&C) will launch a project to modernize its oil refinery to produce Uzbekistan's first eco-friendly oil refinery products.
SK E&C signed an engineering service agreement with Uzbekistan's state-run oil and gas company UNG (Uzbekneftegaz) on July 6 for a $600 million project to modernize its Bukhara oil refinery. The order amount is worth $7.2 million.
SK E&C and UNG signed a collaboration agreement to promote the project at a preliminary event for the bilateral summit in Tashkent, Uzbekistan, in April last year amid support from the two governments, and confirmed the deal through bilateral economic cooperation talks in Seoul on July 6.
UNG is a state-run oil and gas corporation with 120,000 employees established in 1992 and is Uzbekistan's largest company in charge of oil and gas-related projects. It is currently operating two oil refineries (150,000 barrels per day) and plans to expand them into petrochemical businesses in the future in order to upgrade the energy sector, which is being promoted as a national project.
SK E&C will start full-scale FEED through this contract. In the basic design phase, important aspects of the project will be reviewed throughout the project, including overview design of the project as well as identifying the applicable detailed technologies and calculating the cost of carrying out the project.
The project is to modernize the daily output 50,000-barrel oil refinery located in the Bukhara region, 437 kilometers southwest of Tashkent. SK E&C plans to improve its refinery facilities to convert heavy oil into high value-added hard petroleum products, and raise the quality of products such as gasoline and diesel to new eco-friendly standards (Euro V).
In October last year, the Uzbekistan government set a presidential decree to ban imports of petroleum products that are below a certain standard (Euro IV) from 2023. In line with these eco-friendly policies, the Uzbekistan government is pushing to modernize its oil refinery in Bukhara in order to equip its domestic products with eco-friendly standards.
SK E&C is sharing the expertise and technical skills accumulated in the entire process of the project, from investment review to EPC (design procurement construction), operation and maintenance, and creating new business models together.
This year, it is expanding its proportion of eco-friendly businesses and focusing its capabilities on developing eco-friendly business models and technologies.
Earlier in February, it also signed a technology service agreement and memorandum of understanding with Indonesia's largest state-run construction company, PT Wijaya Karya, ‘WIKA,’ for eco-friendly asphalt projects, and is seeking to develop eco-friendly technologies and build commercialization plants. SK E&C is also seeking to expand eco-friendly businesses in various areas.
"We plan to further strengthen our strategic partnership with UNG from a long-term perspective," said Ahn Jae-hyun, CEO of SK E&C. "We will focus more on business models that harmonize social and economic values based on investments in new technologies as well as eco-friendly technologies we own."
