Korea, Saudi Arabia sign biz deals worth $74 bil.
Two nations seek stronger partnership for Vision 2030
President Yoon Suk-yeol and Saudi Arabian Crown Prince and Prime Minister Mohammed bin Salman agreed on the importance of bilateral economic partnership to move the kingdom’s ambitious Vision 2030 initiative forward during their meeting in Seoul, Thursday.
The Saudi crown prince arrived in South Korea on Wednesday after attending the G-20 Summit in Bali, Indonesia. Before meeting Yoon, the crown prince held a flurry of meetings with South Korean government officials and business leaders to discuss ways to deepen the two countries’ economic partnership, which was followed by MOUs worth 100 trillion won ($74 billion).
During the meeting, Yoon said Saudi Arabia stands as South Korea’s largest trading partner in the Middle East and is one of the key companions of Seoul’s economic and energy security, while it is the right time to upgrade bilateral relations as the oil-rich country is paving its way into the future through the crown prince’s Vision 2030 initiative. That vision charts the Middle Eastern country’s future away from an oil-centric economy.
Prince Mohammed said South Korean companies made great contributions to the development of Saudi Arabia’s infrastructure, and that he wants to enhance cooperation between the two countries, specifying the fields of energy, defense and infrastructure, according to the South Korean presidential office.
The last time the crown prince visited Seoul was in 2019 to discuss the two countries’ partnership in Vision 2030. The crown prince also had a meeting with Yoon’s predecessor, Moon Jae-in, when he visited Saudi Arabia in January of this year.
As part of Vision 2030, Saudi Arabia is seeking partnerships with the South Korean government and companies for Neom, a $500 billion (657 trillion won) project the crown prince initiated in 2017. The project aims to develop eco-friendly and smart cities covering a total of 26,500 square kilometers in Saudi Arabia’s northwestern Tabuk Province near the Red Sea.
Before Yoon’s meeting with the crown prince, South Korea and Saudi Arabia signed 26 MOUs, whose combined value is assumed to surpass 100 trillion won.
The MOUs encompassed South Korean companies’ participation in the railway infrastructure of the Neom project and the kingdom’s other massive projects involving the areas of construction, petrochemicals, agriculture and energy.
During his meeting with the South Korean president, Prince Mohammed noted that he wants the two countries to cooperate to develop hydrogen energy, carbon capture technology and nuclear power, including small modular reactors (SMRs). SMRs are touted as the next generation of nuclear reactors, defined by safer and simpler designs and construction method despite a lower power generation capacity.
Saudi Arabia is looking for a builder for its nuclear power plant project involving two 1.4-gigawatt reactors by 2030. With South Korea, France, China and Russia showing their intent to participate in the 12 trillion won project, the competition is now viewed as a two-way race between Korea Electric Power Corp. and Russia’s Rosatom.
Although the crown prince’s reference is interpreted as a positive sign for South Korea’s bid to bag nuclear power contracts from Saudi Arabia, the kingdom’s relations with the U.S. is casting uncertainties.
Currently, the U.S. is saying that South Korea’s flagship nuclear reactor, APR-1400, uses key technologies of Westinghouse Electric Company.
Thus the reactor’s export should be approved by the firm and the U.S. Department of Energy. Although this remains as a disputable matter, industry officials say Saudi Arabia’s relations with the U.S. may affect Seoul’s efforts to win nuclear power contracts.
A Seoul-Washington agreement on nuclear reactors also remains as a setback. Last year, South Korea and the U.S. agreed to join forces to export nuclear reactors and to demand an importing country to sign an additional protocol of its safeguard arrangements with the International Atomic Energy Agency (IAEA), which allows the agency to increase its verification capability in the importing country.
Korea and Saudi Arabia have made deals worth up to 100 trillion won ($74 billion) for joint economic cooperation in major industries, including manufacturing, smart technology, bio and healthcare, city planning, infrastructure building, energy, agriculture, environment and gaming, the industry ministry said Thursday.
Central to the joint economic ties lies the five-stage construction project worth $500 billion (662 trillion won) for Neom, the new smart city being built in Tabuk Province. The green city construction project is spearheaded by Crown Prince Mohammed bin Salman, the prime minister of Saudi Arabia, for the transition to a sustainable, eco-friendly future away from the present fossil fuel-reliant economy.
The crown prince was in Korea, Thursday, to foster bilateral cooperation. About 200 local industry leaders and 60 Saudi trade, investment authorities and business executives attended a Korea-Saudi investment forum organized by the ministry. They signed 26 memoranda of understanding (MOUs) during the seven-hour event.
S-Oil
S-Oil, a Seoul-headquartered petroleum refiner, of which 63.4 percent is held by an affiliate of Saudi Aramco, a Saudi Arabian state-run oil firm, said Thursday that it plans to invest $7 billion into a petrochemical project in Ulsan, a southeast port city. This is the largest foreign investment in Korea.
The Shaheen Project will feature one of the world’s largest refinery-integrated petrochemical steam crackers, providing a stable building block for the petrochemical industry in Korea and around the world. It follows a $4 billion phase-one petrochemical expansion project completed in 2018.
The new project will lead to an annual production of about 3.2 million tons of petrochemicals, as enabled by the steam cracker featuring Aramco’s cutting-edge TC2C thermal crude-to-chemicals technology. The equipment will produce high-value petrochemicals, feedstock for plastics and other synthetic materials. Construction will begin in 2023 and take about three years.
The project will be advanced by engineering, procurement and construction (EPC) contracts signed between S-Oil and three local construction affiliates of Hyundai and Lotte, the ministry said.
“The Shaheen Project is the single largest foreign investment in Korea to date,” Trade, Industry and Energy Minister Lee Chang-yang said during the forum held at the Korea Chamber of Commerce and Industry (KCCI) in Seoul.
“The project is an exemplary case whereby petro energy can be elevated to a low-carbon, sustainable source of power to the mutual benefit of Korea and Saudi Arabia, thereby advancing constructive bilateral cooperation in green energy.”
Green hydrogen plant
Another case in point is an MOU signed between Public Investment Fund (PIF), the sovereign wealth fund of Saudi Arabia with about $620 billion in assets under management, and a local public-private energy consortium led by Korea Electric Power Corp. (KEPCO) to build a green hydrogen and ammonia plant in Neom.
Among them are Korea National Oil Corp. and Korea Southern Power Corp. — two of KEPCO’s staterun peers — as well as steelmaker POSCO and Samsung C&T, the construction and engineering affiliate of Samsung Group.
The agreement is for a total of $6.5 billion to build a 396,694-square-meter plant near Yanbu, a western port city on Saudi Arabia’s Red Sea coast, by 2029, and operate it for 20 years thereafter.
The Samsung affiliate signed a separate MOU with PIF to advance cooperation in the modular business.
26 MOUs
Hyundai Rotem — a railway vehicle, defense products and plant equipment manufacturing affiliate of Hyundai Motor Group — signed an MOU with Saudi Arabia’s investment ministry to build a train line in Neom.
The Hyundai affiliate is among five local private market players that signed MOUs with the ministry, alongside Lotte Group’s chemical material manufacturing affiliate Lotte Fine Chemical, petrochemical firm DL Chemical, bio firm GL Rapha and Shiftup, a game designer and developer.
Saudi Arabia’s Alfanar Construction signed an MOU with Daewoo E&C for cooperation in oil, gas and petrochemicals. It will strengthen cooperation with Hyosung Heavy Industries, the manufacturing affiliate of Hyosung Group, to establish a gas-insulated switchgear manufacturer. The Saudi firm also signed an MOU with Doosan Enerbility, the energy affiliate of Doosan Group, to build a metal casting and forging plant.
Kolon Global, the construction and engineering affiliate of Kolon Group, will partner with Faidh International Food, Saudi Arabia’s food manufacturing and trading firm, to construct a smart farm.
Vision 2030 Committee
The ministry said the government will mobilize its utmost efforts to facilitate the joint projects whereby Korea’s top-notch construction technologies and 3D modular capabilities can be used for the construction of Neom and further to Qiddiya, an entertainment megaproject launched in 2019 in Riyadh and the Red Sea.
“The Korea-Saudi cooperation has expanded to include smart city planning, smart farms, education, healthcare, culture and other services sectors, in addition to the strong current ties underpinned by high-tech manufacturing and energy cooperation. Korea expects a more fruitful outcome from the Korea-Saudi Vision 2030 Committee established in 2017,” Lee said.