date 17-04-24 13:11 | hit 5,315 | comments 0
South Korean shipbuilder Daewoo Shipbuilding & Marine Engineering (DSME) has finalised an order for what is its largest plant project. DSME will build oil production modules for Tengizchevroil LLP (TCO), which announced today that it has received final investment decision (FID) approval from its partners for the Future Growth Project and Wellhead Pressure Management Project (FGP-WPMP), the next expansion of the Tengiz oil field in western Kazakhstan. TCO shareholders include Chevron Overseas Company, which has a 50% stake; KazMunayGas NC JSC, which has a 20% stake; ExxonMobil Kazakhstan Ventures Inc., which has a 25% stake and LUKARCO B.V., which has a 5% stake. DSME had obtained this order, worth USD2.7 billion in 2014. It is the largest plant building order for DSME, topping the USD2.1 billion Pazflor floating production, storage, and offloading (FPSO) project, which was ordered by French oil major Total in 2007. DSME would begin constructing the oil production modules at the beginning of 2017 accordingly. This investment decision is expected to help DSME to improve its financial stability and enhance its liquidity, saving jobs in the process. DSME has been struggling with a highly publicised liquidity crunch as a result of alleged accounting fraud that resulted in a massive USD2.8 billion loss in 2015 as losses from offshore plant orders were concealed from its books. The fraud was allegedly perpetrated by DSME’s two previous CEOs, Ko Jae-ho and Nam Sang-tae. Both men have since been detained, while the National Pension Service has filed a lawsuit seeking KRW48.9 billion (USD43 million) in damages from DSME and the latter’s former auditor, Deloitte Anjin. DSME CEO Jung Sung-leep said, “[The] Tengiz project would be valuable business for DSME and our partners. We will do our best processing this construction and the project will be a turning point for DSME.” Jung was in Europe from 11 to 17 July, reportedly persuading customers to make advanced payments to ensure that DSME has sufficient cashflow.