South Korea's STX Offshore and Shipbuilding, the world's fourth-largest marine builder, plan to open talks this year with Abu Dhabi Ship Building (ADSB) to help it break into the regional market for offshore support vessels. The budding alliance between STX and ADSB, based in Musaffah, is part of a wave of new connections between UAE and South Korean companies after the US$20.4 billion (Dh74.92bn) nuclear plant contract that Emirates Nuclear Energy Corporation awarded to Korea Electric Power Company (KEPCO) in December.
STX, which already operates in Europe, South America and South East Asia, is seeking opportunities in the Middle East, said HJ Park, the managing director of STX Middle East, a subsidiary in Dubai. "We want our business to extend into the Middle East area. Working in the design and engineering area could be an advantage for STX," he said on the sidelines of the Korea-Abu Dhabi Business Forum, which took place last week under the auspices of the Department of Economic Development.
STX already has strong ties to the Middle East's largest shipping companies after signing contracts for product and chemical tankers with operators such as ETA, which is based in Dubai, Qatar Shipping and Oman Shipping. In March 2008, for example, Emirates Ship Investment (Eships) of Abu Dhabi placed an order with STX for two 6,500-cubic metre, semi-refrigerated liquefied petroleum gas tankers at a cost of Dh278 million.
The orders from the Gulf will primarily be filled at STX shipyards at Busan and Jinhae, in South Korea. But now STX is eyeing the market for smaller work boats that are a staple of the offshore oil and gas industry, and is offering to provide detailed engineering work for ADSB. State oil companies in the Gulf own hundreds of work boats and offshore support vessels, and their fleets are expected to grow as they step up production. Abu Dhabi is embarking on an emirate-wide expansion of oil projects, with 50 per cent expected to be sited offshore, while Saudi Arabia has just begun drilling in its "supergiant" Manifa offshore field.
Entering the market for support vessels would be a new move for ADSB, which has to date focused primarily on building military vessels and also retrofitting and maintaining the fleets of local navies and marine authorities. STX plans to establish a working group with ADSB in the next few months, Mr Park said. He declined to say how large a potential contract could be, or how many vessels the two firms hoped to partner on each year.
"The steering committee will be formalised shortly," he said. "Then we will invite them to Korea. After that we can discuss in detail what the co-operation would be." The two companies first signed a memorandum of understanding to explore areas of co-operation in January, just weeks after the contract for four nuclear power plants was awarded. At the same time, companies from the semiconductor industries in both countries have signalled their intention to form an alliance. Korean trade officials said that co-operation was possible in other areas, such as clean energy, and there has been talk of a cluster of South Korean renewable energy firms setting up at Masdar City, the planned zero-carbon community in Abu Dhabi.