Daewoo Shipbuilding & Marine Engineering said Monday it will kick off building oil plant modules that is worth $2.7 billion, the largest plant project in the company’s history.

The shipbuilding firm said the shareholders of Tengizchevroil LLP -- Chevron Overseas Co., ExxonMobil Kazakhstan Ventures, LUKARCO B.V. and KazMunayGas NC -- had made the final investment decision on expanding the Tengiz oilfield in western Kazakhstan. The expansion project is worth $38.8 billion, the shipbuilder said. 

Earlier in November 2014, the Korean shipbuilding company obtained the order from TCO of building modules for buiding production facilities that worth $2.7 billion. This is the largest order in DSME’s history. The previous record was Pazflor FPSO project worth $2.1 billion which was ordered by French oil major Total in 2007.

As the final investment decision is made, the construction of the oil production modules is projected to be launched from early next year.

The expansion project has been delayed due mainly to the plummeting oil price.

The total modules ordered to DSME amounts to about 240,000 tons, which will likely provide workloads for three years for DSME and its affiliates, it added.

The Korean company is planning to hand over the 90 completed modules by 2020.

Once the project is complete, the output of crude oil from Tengiz oilfield is expected to surge by 50 percent to 760,000 barrels a day. The first oil is projected to be produced in 2022.

The project is expected to alleviate the financial difficulties of the ailing firm once it receives first expenses of $130 million.

DSME has faced challenges of financial difficulties amid the widening probe into the company’s massive accounting fraud and embezzlement.

Four DSME high-ranking officials have been arrested, including ex-CEOs Nam Sang-tae and Ko Jae-ho on charges of causing massive accounting fraud.

“The Tengiz project will likely be a great help for both the company and its partner firms amid the declining marine construction projects,” said DSME CEO Jung Sung-leep. “(The company) will take this opportunity to dispel the public concerns over the company by making thorough preparation.”

By Lee Hyun-jeong  (rene@heraldcorp.com)