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Publish Date : 20-Feb-2014

Corporate sources said on 19 February 2014 that a South Korean joint venture secured a US $6.04 billion contract to construct an oil refinery in Iraq.

The order won by the four builders, led by Hyundai Engineering and Construction Co. and GS E&C, represents the single biggest industrial plant project won by local firms.

The order was placed by State Company for Oil Project and will be constructed in Karbala, around 120km southwest of Baghdad.

The construction is anticipated to take 54 months for a refinery that can process 140,000 barrels of crude oil per day into liquefied petroleum gas, diesel, gasoline, and other petroleum products.

A press release by Hyundai E&C said, "The project is noteworthy because companies carefully checked profit margins and overall business value before trying to win the bid."

It said the tie-up between rivals to win the contract can set a precedent for similar arrangements in the future and prevent the kind of competition cited as undermining the health of many local construction
companies in the past.

Beside GS E&C and Hyundai E&C, the joint venture is made up of Hyundai Engineering Co and SK Engineering and Construction Co.

The two Hyundai companies combined 37.5% stake in the cooperative effort, with SK and GS controlling 37.5% and 25%, respectively.

The stakes translate into over $2.26 billion each for GS E&C and the two Hyundai affiliates combined, and $1.51 billion for SK E&C.

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