Samsung Engineering commits to partnership with Arabtec after changes at UAE builder

Represents a vote of confidence in the new strategy announced by Arabtec last week after a month of turbulence.

Samsung Engineering is bidding for the $3.5bn contract to build an oil refinery in Fujairah. Silvia Razgova / The National

The new strategy announced last week by Arabtec, the UAE's largest contractor, has received a vote of confidence from Samsung Engineering, the South Korean conglomerate with whom it shares an ambitious joint venture .
Samsung has kept silent during the month of turbulence which rocked Arabtec's share price and saw a big management shake-up, but it has told The National that it had been watching developments at the company throughout the period.
"Samsung has been in steady contact with Arabtec. Even though there are changes in the top management of Arabtec, there will be no impact on the joint venture. The project proposals will be executed as planned," a spokesman for the South Korean company said from its Seoul headquarters.
Although he declined to specify which projects the venture is interested in, an industry source suggested one focus could be on the $3.5bn contract to build an oil refinery in Fujairah, at the outlet of the 400km pipeline from Abu Dhabi's oilfields to the Indian Ocean port.
Although Samsung Engineering is bidding for the Fujairah refinery on its own, an industry source in Seoul said that Arabtec could benefit if the Korean company won the contract, in the form of sub-contracts for work on the ambitious project.
International Petroleum Investment Company (Ipic), the Abu Dhabi-owned investor group which owns the pipeline, also owns Aabar Investment, Arabtec's second biggest shareholder.
Khadem Al Qubaisi, chairman of Arabtec and Aabar and also managing director of Ipic, said last week that Arabtec would refocus on its core business of contracting, but that other major projects, like the Samsung joint venture, would proceed as planned.
Some analysts had cast doubt on whether the partnership, signed in Seoul last year by former Arabtec chief executive Hasan Ismaik, would survive the shift in strategy after Mr Ismaik resigned two weeks ago.
Senior executives who had helped construct the joint venture also left the company after Mr Ismaik's departure, including former Deutschebank strategist Shohidul Chowdhury and his team.
News that the Samsung JV is alive and well will be a boost for Arabtec shareholders, who have seen the value of their investment plummet on Mr Ismaik's departure and uncertainty about Arabtec's future direction.
The Fujairah refinery is being viewed as a litmus test. The joint venture was launched as Arabtec Samsung Engineering in Seoul amid a blaze of publicity, but which has not yet produced any deal to back its ambitions to tap the lucrative market in high value projects in the oil, gas and petrochemicals sectors, which are Samsung specialities.
Tenders for the project were sought by IPIC last year, and it is believed a technical evaluation of the bidder's proposals is close to completion. The timetable is for the tender process to close in September and the successful bidder announced by the end of the year.
Samsung will not have it all its own way however. The Seoul industry source, speaking on condition of anonymity because the bidding process is confidential, said four other companies were also seeking to clinch the Fujairah contract.
They include GS Engineering, which is also in the process of negotiating a partnership with Arabtec, as well as another Korean group Daelim. The Korean arm of Japanese conglomerate JGC and Intecsa of Spain are also interested, the source said.
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