Sep. 20, 2009 (The Korea Times) -- By Kim Hyun-cheol
Staff Reporter
South Korean plant builders suffered a huge industrial cold spell in a series of annulled projects in the Middle East amid the global financial crisis until the first half of this year.
A quick rebound in plant bids over the last couple of months, however, is rekindling hopes that the region will reemerge as a goldmine.
Performances of Korean companies have got back on track in Middle Eastern countries over the last two months, the Korea Plant Industries Association said Thursday.
Korean builders won orders there in July and August amounting to $9.6 billion, up from $8 billion in the same period last year. The jump represents a quick turnaround from the slumping business earlier this year. In the first half, Korea won plant orders from Arab nations totaling $3.3 billion, less than half the $7.3 billion it had a year ago.
Most recently, Doosan Heavy Industries & Construction said Thursday it won a 1.3 trillion won ($1.1 billion) order to build a power plant in Saudi Arabia by 2013. Doosan and its Saudi Arabian partner BEMCO are set to sign a contract to build the 330-megawatt plant near the eastern city of Damman with Saudi Electricity next month, the company said in a statement.
Earlier this month, it inked another 300-billion-won ($248.5 million) Saudi deal to provide boilers and steam turbines for a thermoelectric power plant in the Yanbu Industrial Complex, which will be constructed by 2012.
Elsewhere, shipbuilder Hyundai Heavy Industries teamed up with General Electric (NYSE:GE) Energy earlier this week to ink a $2.7-billion deal with the Kuwaiti government to build a new natural gas-fired power plant.
Hyundai Heavy will be in charge of engineering, procurement and construction for the 2,000-megawatt plant in northern Kuwait, which will go into operation in 2011.
September also saw STX Heavy Industries win a $200-million steel mill project in Saudi Arabia. STX Heavy and Saudi Arabia's South Steel Company signed a deal to complete the factory by 2011, STX Group said in a statement.
Several more huge projects are underway in the region, including the $3-billion construction of a refining and gas plant by ADNOC, an Abu Dhabi-based state-run oil firm.
Energy development is also creating competition in the Arab world as its development is outstripping their power generation capabilities, expanding the territory even to nuclear energy. Currently Korea Electric Power Corporation (NYSE:KEP) , Hyundai Heavy and Samsung C&T Corporation (OOTC:SSGFF) are vying for a $40-billion bid to build more than four nuclear reactors in the United Arab Emirates.
Consequently, Korean companies will be given more opportunities in the region, experts say. "It's more like a temporary surge as Middle Eastern countries are resuming halted projects with rebounding oil prices. But in a positive signal, more promising research is coming out now to say the economy has hit the bottom in the region," said Park Chul-hyung, a senior researcher at the Korea Institute for International Economic Policy.
With the growth in the Middle East, the Korean government expects the country to reach its annual target of $40-billion in orders overall. With the economy sagging and oil prices plummeting across the world, Korea faltered in vying for overseas plant project bids in the first half at $7.4 billion in total, down 67 percent from the previous year.
"We predict more projects will come along in the fourth quarter, as oil prices are stabilized at around $60 per barrel and power shortages continue in the Middle East," said an official of the Ministry of Knowledge Economy.
