$3.1bn lng facility contract

April 2016

A consortium led by Hyundai Engineering has won a $3.1-billion construction deal to build a liquefied natural gas (LNG) import terminal in Al Zour, 90 km south of Kuwait City.

Of the total deal, Hyundai Engineering and Construction (E&C) share accounts for $1.59 billion, while Hyundai Engineering and Korea Gas will take shares of $1.46 billion and $17.2 million, respectively

Under the deal with the state-owned Kuwait National Petroleum Company, Hyundai E&C, Hyundai Engineering and government-run Korea Gas are expected to construct a re gasification facility to process three billion cu m of gas daily, in addition to eight 225,000 cu m of LNG storage tanks and docking facilities near Al Zour area.

Hyundai Engineering is expected to be in charge of the construction of the re-gasification facility while Hyundai E&C will build the eight tanks and docking facilities. The trial operation and training over the facilities will be led by Korea Gas. The construction period is expected to be 58 months and the project completion is scheduled for 2020.

“Due to a decline in oil prices and weakened purchasing power in the area, the bidding in Kuwait had been delayed since 2014. Korean President Park Geun-hye’s visit to the Middle East including Kuwait in March 2015, however, boosted our negotiation and we successfully finalised the deal,” says Jung Soo-hyun, CEO of Hyundai E&C.

Due to falling oil prices, Korean companies’ construction contracts in the Middle East halved last year to $16.5 billion compared to construction deals worth $31.3 billion in 2014.

Experts expect this construction deal to be a turnaround that will encourage another contracts in the Middle East despite the weakened purchase power in the Middle East.

“The synergy between Hyundai Motor group affiliates maximised the competitiveness in the bidding. We will continue to take a similar approach to upcoming bids in the Middle East including the construction market in Iran,” he concludes.

Hyundai Engineering is an affiliate of Hyundai Motors.

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