Samsung E&A enters SAF EPC market with $955 mn Malaysian bioplant deal

Samsung E&A Co., the construction and engineering unit of South Korea’s top conglomerate Samsung Group, said on Wednesday it has clinched a $955 million deal to build a biorefinery plant in Malaysia.

The company said in a regulatory filing that it received a letter of award on the project from Enilive S.p.A., a leading member of the Phoenix Biorefinery Project joint venture, which includes Petronas Mobility Lestari Sdn Bhd and Euglena Co.

The value of the project is 13.6% of the company’s 2023 sales revenue.

The project involves building an eco-friendly plant in Pengerang, in the southern Malaysian state of Johor, which processes waste cooking oil, palm oil, and animal fats to produce 650,000 tons of sustainable aviation fuel (SAF), biodiesel and bio-naphtha annually.

Samsung E&A, formerly Samsung Engineering Co., expects to sign a formal contract on the deal in January 2025.

Samsung E&A will be responsible for the engineering, procurement, construction and commissioning (EPCC) of key equipment of the project.

SAMSUNG ENTERS SAF EPC MARKET

With the latest deal, Samsung E&A is entering the SAF EPC market, an emerging energy transition sector.

SAF, produced from bio-based feedstock such as waste cooking oil and palm oil instead of fossil fuels, is gaining attention as a next-generation eco-friendly energy source as it significantly reduces carbon emissions.

With ongoing global decarbonization initiatives, a growing number of countries are mandating the use of SAF blends, pointing to continued SAF market growth. 

The European Union will require at least 2% SAF blending in aviation fuel starting next year, while Singapore plans to mandate a minimum of 1% SAF blending from 2026.

Korea is also preparing to introduce SAF blending requirements in 2027.

Leveraging over a decade of project experience in Malaysia and its advanced engineering technology, Samsung E&A said it will actively pursue SAF EPC projects globally.

Last year, Samsung E&A formed a consortium with two Korean firms – Lotte Chemical Corp. and Korea National Oil Corp. – and their Malaysian partner Sarawak Economic Development Corp. (SEDC), to produce renewable energy-based green hydrogen in Sarawak and bring it to Korea.

Write to Woo-Sub Kim at duter@hankyung.com

In-Soo Nam edited this article.