Saudi is key partner on industrial projects

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Saudi is key partner on industrial projects

The government of Korea will work as a key partner with Saudi Arabia as the oil giant seeks industrial diversification amid falling global oil prices.

Joo Hyung-hwan, the Minister of Trade, Industry and Energy of Korea, met with Khalid A. Al-Falih, the Minister of Energy, Industry and Mineral Resources of Saudi Arabia, at the Four Seasons Hotel in Jongno District, central Seoul, on Tuesday. The main agenda on the table between the energy ministers was their countries’ partnership in Vision 2030, a plan announced in April 2016 by Saudi Arabia to reduce its dependency on oil exports and diversify its economic portfolio. Saudi Arabia chose Korea as one of its five strategic partners in the initiative.

“Joo and Al-Falih shared the understanding that [Korea and Saudi Arabia] should focus on seven business-to-business projects including shipbuilding, automobile and renewable energy,” Korea’s trade ministry said in a press release, adding that joint ventures will capitalize on industries where Korea has a competitive advantage.

The Korean trade ministry said the Korean government and companies could offer policy experience and technological expertise. In return, Korean companies may gain access to Saudi Arabia as well as other Middle Eastern and North African markets.

Some Korean companies have already launched joint projects with their counterparts in Saudi Arabia.

Aramco, Saudi’s national oil company, has been in negotiations since November 2015 with Korea’s top shipbuilder Hyundai Heavy Industries to finalize a contract to build a large shipbuilding complex in Saudi Arabia called King Salman Global Maritime Industries Complex. It is also the first national industrial project by Saudi Arabia. Al-Falih said during Tuesday’s meeting that the issues related to project financing by the government of Saudi Arabia have been resolved and the contract to establish a joint corporate body between HHI and Aramco should be finalized soon.

Outside of shipbuilding, SsangYong Motor, a Korean unit of Indian auto giant Mahindra & Mahindra, is working to build an auto manufacturing plant in Saudi Arabia in a joint effort with Saudi National Automotive Manufacturing (SNAM). “The two ministers discussed the possibility of Saudi Arabia’s Public Investment Fund financing the project,” the Korean trade ministry said in a release. SsangYong inked a deal with SNAM in February to build auto parts in Saudi, hoping to kick off production there by the end of 2019.

Renewable energy was another topic on the table. Joo said Korean companies such as state-run Korea Electric Power Corporation are “willing to participate through mutual financing … in building a solar power plant in Saudi Arabia.”

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