Hyundai Heavy Industries CEO Lee Jae-seong (second from left) signs a $3.3 billion plant deal in Riyadh on Sunday with Saudi Electricity Company chairman Saleh bin Hussein Al Awaji (third from left) to build a thermal build power plant near the Red Sea by 2017. (HHI)
Hyundai Heavy Industries bolstered its presence as a global power plant builder in Saudi Arabia as it clinched its fourth mega-power plant construction deal with state-run Saudi Electricity Company.
According to the company, HHI CEO Lee Jae-seong and SEC chairman Saleh bin Hussein Al Awaji signed a $3.3 billion power plant construction deal for the Shuqaiq steam power project in Riyadh on Sunday. In the deal, Hyundai Heavy will build a thermal power plant with a 2,640-megawatt capacity near the Red Sea by 2017.
The deal is a turnkey project for HHI, which is responsible for everything from plant design and engineering to construction and testing.
“This is the fourth power plant deal in Saudi Arabia following the $3.2 billion deal known as the Jeddah South project from SEC to build an oil-fired thermal power plant with the same power generation capacity last October,” a company official said.
“The two power plants, both of which will be completed in 2017, will cover around 10 percent of electricity generation in Saudi Arabia.”
The company expects that the multiple mega-power plant deals in the Middle East will serve as a stepping stone for the world’s top shipbuilder to build its reputation as a global onshore plant builder, which will help it diversify its business portfolio. Hyundai Heavy has been diversifying its business portfolio, including targeting onshore power plant projects, in the face of falling shipbuilding orders amid the prolonged global economic downturn.
The company’s plant business division, which seeks onshore engineering-procurement-construction deals, is much smaller than the company’s core shipbuilding and offshore business division. The annual order target for the division is set at $6 billion, while the firm’s shipbuilding and offshore division seeks $29.7 billion in orders this year.
“The company raised the annual order target in plant business by 50 percent this year from $4 billion in 2012 based on market demand and met about 50 percent of the order target with the latest power plant deal in Saudi Arabia,” the company official said.
The company’s power plant division is keeping an eye on rising demand for industrial power plants in the Middle East as demand for power and desalination plants in the region continue to grow, boosted by economic and population growth.
By Seo Jee-yeon (firstname.lastname@example.org)