South Korean companies strike it rich in UAE

Country gets billions in new contracts and deals awarded in the capital's oil, gas and construction sectors are just the beginning.

Takreer has awarded several large contracts for the Ruwais refinery expansion to South Korean contractors.

New South Korean regulatory disclosures suggest the total value of UAE contracts won by companies from the state has passed US$35 billion (Dh128.53bn), including more than $32bn of deals signed last year. More may be coming, in sectors spanning nuclear power, oil and gas, renewable energy, chemicals, defence and property.

"The UAE is recognising the capabilities of Korean contractors," said Kim Ji-ho, the business development manager for South Korea's Samsung Engineering Abu Dhabi. "Two to three years ago there were no big contracts here with Korean companies." Samsung won the main contract to build power and water facilities for a $10bn expansion of Abu Dhabi's biggest oil refinery at Ruwais, Mr Kim said. In a filing this week with South Korea's securities regulator, Samsung valued the deal at $2.73bn.

Takreer, the petroleum refining unit of the government-owned Abu Dhabi National Oil Company (ADNOC), awarded several large contracts for the refinery expansion last November, including three to South Korean firms. The regulatory filings revealed that the biggest of those was a contract to build a catalytic cracker, in which large hydrocarbon molecules are broken down. The contract was worth 17 per cent more than previously estimated. GS Engineering and Construction valued the deal at $3.63bn.

Two other Korean contractors, SK Engineering and Construction and Daewoo Engineering and Construction, said they had respectively won a $2.1bn contract for a distillation unit and a $1.17bn deal to build a tank farm for the refinery. The four contracts, totalling $9.63bn, account for all the major work packages at the refinery. "Korean companies are becoming very well known in the world for successfully completing major projects on time and within budget and with good quality," Mr Kim said. "We can extend our capability to the UAE Government."

Samsung Engineering's parent company, Samsung Corporation, was the first Korean company to win a major construction deal in the UAE, when it was awarded the main contract to build Dubai's landmark Burj Khalifa tower, the world's tallest building. That was the first and last such deal in Dubai. But in 2006, Hyundai Heavy Industries broke ground in Abu Dhabi's booming energy services and construction sector with a contract to develop gas injection facilities to boost output from the emirate's giant Umm Shaif oilfield in the Gulf.

It paved the pay for last year's Abu Dhabi contract awards to Korean firms. That culminated in December with the record $20.2bn deal between the UAE Government-owned Emirates Nuclear Energy Corporation and a South Korean consortium led by Korea Electric Power Corporation (Kepco) to build four nuclear reactors in Abu Dhabi. The Korean group beat French and US-Japanese bidders by submitting a significantly lower bid.

"Our relationship with South Korea, which has seen sustained growth in recent years, has ushered in a new age of strategic partnership which will serve the interest of the two countries," said Sheikh Khalifa, President of the UAE and Ruler of Abu Dhabi, as he signed the contract with the South Korean president Lee Myung-bak. Outside of the energy sector, Korean construction companies are now in the running for major property development contracts in the capital. Korean enterprises including Samsung, Daewoo, Hyundai Engineering and Construction, SsangYong, Posco Engineering and Construction, and HanmiParsons are among the bidders for contracts related to such high-profile property projects as ADNOC's new corporate headquarters, the Louvre Abu Dhabi and Zayed National Museum, and the Arzanah medical complex on Abu Dhabi Island. @Email:[e-mail]