Samsung E&A, GS E&C secure $7.22 billion water and gas projects in Saudi Arabia

Industry

Published: 03 Apr. 2024, 12:21 Updated: 03 Apr. 2024, 19:10

Samsung E&A, GS E&C secure $7.22 billion water and gas projects in Saudi Arabia

Samsung E&A CEO Namkoong Hong second from left, and Saudi Aramco executives pose for the photo after a signing ceremony on Tuesday at Dhahran, Saudi Arabia, to build gas processing facilities for the Fadhili industrial complex. [SAMSUNG E&A]

Two Korean construction companies have clinched a combined $7.22 billion project of Saudi Aramco, the state-owned oil company of Saudi Arabia, to construct gas plants within the country, the presidential office announced on Wednesday.

The office views the achievement as the result of the strengthened diplomacy between the two countries in the wake of the first bilateral summit between President Yoon Suk Yeol and Saudi Arabian Crown Prince Mohammed bin Salman Al Saud in Korea in November 2022, where they agreed to a strategic partnership in defense, energy and infrastructure.

The two countries also agreed to deepen collaboration on various Vision 2030 Saudi infrastructure and tourism developments when Yoon visited Riyadh in October 2023, including major Saudi projects such as the NEOM mega-city.

GS Engineering & Construction (GS E&C) has been awarded $1.22 billion to build hazardous waste treatment facilities at the Fadhili industrial complex, situated 80 kilometers (50 miles) from the city of Jubail in the eastern province of Saudi Arabia.

GS E&C's involvement pertains to three sulfur recovery units capable of processing 800 tons of sulfur per day. The company will oversee the entire project, from facility design to procurement, construction and commissioning support.

Samsung E&A has secured a $6 billion contract for the expansion of gas treatment facilities and other utilities at the industrial complex. Upon completion, the daily gas-processing capacity will increase from 2.5 billion cubic feet (70.7 million cubic meters) to 3.8 billion cubic feet.

It will be the largest-ever project undertaken by Samsung’s construction arm since its establishment, and constitutes a record-high deal with Saudi Arabia for all Korean construction firms.

According to the presidential office, this project marks the largest in size ever secured by Korean companies from Saudi Arabia, and is the third-largest overseas construction project after the Barakah Nuclear Power Plant in the United Arab Emirates, built for $19.1 billion in 2009, and the New Basra City in Iraq, constructed for $7.7 billion in 2012.

With the recent deal, the value of overseas construction project orders secured by Korean companies reached $12.72 billion from January to April, more than twice as large as last year’s $6.11 billion during the same period.

The signing ceremony, held in Dhahran, Saudi Arabia, on Tuesday was attended by GS E&C CEO Huh Yoon-hong, Samsung E&A CEO Namkoong Hong, and Saudi Aramco Vice Presidents Wail A. Al Jaafari and Yahya A. Abushal.

Following the news, the two construction companies’ shares surged on Wednesday. Samsung E&A’s shares rose 2.64 percent to close at 25,300 won ($18.76), while GS E&C shares jumped 4.34 percent to 15,630 won.

BY LEE JAE-LIM [lee.jaelim@joongang.co.kr]