H yundai Engineering and Construction (E&C)’s winning a mega-project from Venezuela has brought to $37.5 the value of overseas construction orders Korean contractors have landed in the first half of this year. 

The figure represents a 22 percent surge over the same period last year during which Korean construction companies won a combined $30.9 billion in orders, as well as the highest first-half order levels in the history of Korean overseas construction. The figure also surpasses the Korean construction industry’s achievement in the first half of 2010 when Korea won an $18.6 billion nuclear power construction project from the United Arab Emirates. 

If this trend continues, the Korean construction industry will likely achieve the 2014 overseas order goal of winning a combined $70 billion during the whole of this year.

Hyundai E&C was awarded the $4.8367 billion (some 4.9 trillion won) Puerto La Cruz refinery expansion and facility upgrade project from Venezuela’s state-run oil company PDVSA in conjunction with Hyundai Engineering, a subsidiary of Hyundai Motor Group, and Wison Engineering of China. 

The project involves the modernizing of an existing refinery to increase its production capacity in Puerto La Cruz, some 250 km east of Caracas. 

Korean contractors’ successive overseas construction project orders are owed to their collaboration among themselves in lieu of undercutting. Hyundai E&C’s winning of the refinery project in Venezuela was attributable to the company’s forming of a consortium with Hyundai Engineering. Hyundai E&C is in charge of the construction and overall management of the project, while Hyundai Engineering is charged with design and part of procurement. 

Korean contractors’ overseas construction markets have been diverse. The Middle East, Korea’s traditional stronghold, accounted for 66 percent, or $24.74 billion, of the cumulative value of orders Korean contractors landed in the first half of this year, followed by Asia with a 17 percent share, or $6.21 billion. They won overseas orders worth $5.49 billion, a surge of $5 billion, from Central and South America.

Government and the Korean construction industry forecast bright prospects in the second half of this year. Korean contractors are preparing for their participation in biddings worth a combined $110 billion, including a bid for the $12 billion new refinery project in Kuwait. Five out of the six consortia that passed the pre-qualification process come from Korea. 

International uncertainties, including a civil war in Iraq and a Thai coup d’etat, coupled with the prolonged strengthening of the Korean won, could have a negative impact on whether or not Korean contractors win new orders, industry analysts said.

Kim Un-jung, head of the Entry Support Office at the International Contractors Association of Korea (ICAK), said, “If Korea continues to land high-profit mega-projects in new markets, chances are high that Korean contractors will see a resurgence of overseas construction.”