Korea, Saudi companies sign over 20 MOUs, Prince Mohammad arrives in Seoul

Economy

Published: 17 Nov. 2022, 12:20 Updated: 17 Nov. 2022, 19:35

Korea, Saudi companies sign over 20 MOUs, Prince Mohammad arrives in Seoul

Saudi Arabia's Crown Prince and Prime Minister Mohammed bin Salman Al Saud, left, and Korean President Yoon Suk-yeol strolls the president’s residence in Hannam-dong, central Seoul on Thursday. It's the crown prince's first visit to Korea since 2019. [PRESIDENTIAL OFFICE]

Some 26 memorandums of understanding between Korean companies and Saudi Arabia were announced with the arrival of Crown Prince and Prime Minister Mohammad bin Salman Al Saud in Seoul on Thursday.

The business agreements, though they have no legal bound, include a $7 billion petrochemical project by S-Oil, the biggest single foreign investment, as well as Hyundai Rotem’s railroad and hydrogen train development cooperation related to Saudi’s NEOM city project.

The crown prince's trip to Seoul is his first since 2019.

According to the Korean Ministry of Trade, Industry and Energy on Thursday, five of the business agreements were made with Saudi’s Ministry of Investment, including Hyundai Rotem’s NEOM railways.

Of the business-to-business agreements, S-Oil’s investment was the largest. Saudi’s Aramco is the largest stakeholder of S-Oil.

The company signed a contract with three Korean construction companies including Hyundai E&C for a petrochemical plant project “Shaheen” in Ulsan.

Part of the company's plans to diversify the refiner’s business portfolio and increase its green business, the Shaheen project aims to build the world’s biggest steam cracker, which performs a petrochemical process that breaks saturated hydrocarbons such as ethane and propane and light naphtha in producing the unsaturated hydrocarbon, ethylene.

S-Oil has set its goal of expanding its production of petrochemicals to 25 percent from current 12 percent by 2030.

Hyundai Rotem signed an agreement with the Saudi’s Ministry of Investment to build the rail system for NEOM city and work on the development of hydrogen fueled trains.

An MOU was also signed between Samsung C&T with Saudi’s Public Investment Fund on a 3-D modular construction project that will be used in the development of the future cities in Qiddiya and the Red Sea.

Korea Venture Investment Corporation announced it signed a MOU with Saudi Venture Capital Company to create a joint fund. The funding will be given to start-ups and small- to mid-sized enterprises aiming to do business in other countries.

Saudi Arabia’s venture capital says it is highly interested in funding e-sports and entertainment companies.

Arabio, a Saudi Arabian biotech company, also announced at the forum that it signed a MOU with an unnamed Korean company.

The company said it hopes for further cooperation with Korea in vaccine development, hoping that Korea helps Saudi Arabia develop its biopharma manufacturing facilities and foster local talent.

There were also agreements on green energy, including green hydrogen development, between five Korean companies including Samsung C&T with PIF. Greenhouse ammonia agreements were also made between the Korea Electric Power Corporation (Kepco) and Acwa Power.

H2Korea, a public-private think tank, mentioned that it is currently in discussions with the Saudi Arabian government to map out mid- to long-term plans on hydrogen energy cooperation, with more MOUs between Korean and Saudi companies expected to be specified sometime next year.

Khalid A. Al-Falih, Saudi's Minister of Investment, makes an opening speech at the Korean-Saudi Investment Forum held at the Korea Chamber of Commerce and Industry in Seoul on Thursday. [YONHAP]

The MOUs were made during a Korean-Saudi Investment Forum held between the Korean Ministry of Trade, Industry and Energy and Saudi’s Ministry of Investment on Thursday at the Korea Chamber of Commerce and Industry in Seoul.

In addition to Minister of Trade, Industry and Energy Lee Chang-yang and the Saudi Minister of Investment Khalid A. Al-Falih, some 300 businesses from both countries including Korean leading businesses Samsung C&T and Hyundai Motor attended the business forum.

“This year marks the 60th anniversary since Korea and Saudi began diplomatic relations,” Minister Lee said in his speech at the forum. “I propose that we overcome the crisis [of supply network, climate change and the accelerating energy and digital transition] through mutual cooperation that has been built between the two countries in the past in the energy and construction area.”

“The [Korean] government will give its full support so that our companies will succeed in projects including the establishment of the rail network in the smart city NEOM, the joint development with Saudi Arabia on hydrogen train and the 3-D modular high-tech construction method that will be used in the construction of the future cities in Qiddiya and the Red Sea,” Lee added.

With various MOUs signed Thursday and more coming up, Saudi Arabian businesses said the key to inking deals is prioritizing localization.

Jeon Sung-ha, managing director of Hyundai Rotem, said at the forum that it “met with NEOM last week” and that “NEOM is encouraging companies to participate in projects with Saudi Arabia-based companies.”

Abdulrahman Bajunaid, CEO of Al Jomaih Energy & Water, mentioned that one of the last projects his company won with Aramco had 68 percent of the project done by local Saudi Arabian companies, which he mentioned is a key factor that Korea should consider when inking big infrastructure deals with the country.

Saudi Arabian companies also welcomed any Korean automakers willing to build hydrogen car manufacturing factories in its country.

“We plan on attracting more foreign investment, and we would like to welcome Korean companies to the opportunity,” said Fahad Saad Wallan, chairman of Wallan Trading Group. “As our partnerships develop, I believe that Korea’s private sector will play a more important role in making Saudi Arabia’s Vision 2030 come true in big infrastructure projects such as the Red Sea project.”

From left, Lotte E&C CEO Ha Suk-joo, S-Oil CEO Hussain A. Al-Qahtani, Hyundai E&C CEO Yoon Young-joon and Hyundai Engineering CEO Hong Hyeon-sung sign an MOU regarding the Shaheen project at the Korea Chamber of Commerce and Industry's headquarters in Seoul on Thursday. [S-OIL]

BY LEE HO-JEONG, LEE TAE-HEE [lee.hojeong@joongang.co.kr]