SK Engineering Secures Basic Engineering Study Contract for $10 Billion Refineria del Pacificio Refinery in Ecuador

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Researched by Industrial Info Resources (Sugar Land, Texas)--SK Engineering and Construction (SK E&C) (Seoul, South Korea) has secured a $260 million basic engineering study contract for the $10 billion Refineria del Pacifico refinery project in Ecuador. The 300,000-barrel-per-day refinery and an associated petrochemical complex will be located between Manta and Montecristi, in the province of Manabí in western Ecuador.

Under the deal, SK E&C Consultores Ecuador, with the support of parent company SK E&C, will conduct basic engineering studies spanning 18 months. It also will work on environmental benchmarks and perform conceptual engineering studies for the petrochemical complex, which is set to be brought online by 2013.

The Refineria del Pacifico project is a joint venture formed by PetroEcuador (Quito, Ecuador), which holds a 51% stake in the venture, and Petroleos de Venezuela S.A. (PDVSA) (Caracas, Venezuela). Both are state-owned firms in their respective countries.

The project is estimated to require an investment of more than $10 billion. Ecuador plans to raise about 70% of the funds from local banks, private investors, and investment banks in Asia and Europe. The stakeholders will fund the remaining 30% of the venture.

Ecuador, which is the fifth-largest oil producer in Latin America, faces a shortfall in lighter oil derivatives such as liquefied petroleum gas (LPG), gasoline and diesel. The government's expenditure on the import of clean fuels exceeds the revenues it gains from the export of crude.

The new refinery has been designed to process heavy and sour crudes to yield clean fuels. Gasoline from the venture will help meet local fuel demand. Surplus outputs are likely to be exported to the Latin American and Asian markets. The associated petrochemical complex will produce a range of fertilizers, including urea and other solvent byproducts.

SK E&C was awarded the contract due to its reputation for completing projects at a fast pace. If the planned tasks are completed on time, the construction activities for the refinery venture, initiated in 2008, may begin later this year and continue for a couple of years, with the project going live in 2013.

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