Korean Firms Swing Huge Deals in Iran
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Korean Firms Swing Huge Deals in Iran
Daewoo and Hyundai Construction sign deals worth $11.5 Bln with Bahman Geno involving construction of oil refinery and road infrastructure on heel of President Park’s state visit

02(Sat), Jul, 2016

President Park Young-shik of Daewoo Construction, right, and President Jung Soo-hyun of Hyundai Construction, 2nd left, each hold an MOU signed with Bahman Geno of Iran to build an oil refinery and connected roads for $11.5 billion on May 3 in Teheran, Iran, on the heels of President Park Geun-hye’s visit to Iran.(Photo:Daewoo E&C)

Daewoo Engineering and Construction Co. signed an MOU with Iranian project owners on two projects involving the construction of petrochemical plant and roads in and out of the plant complex worth $11.5 billion. The deals involving Hyundai Construction on May 3 came on the heels of President Park Geun-hye’s state visit to Iran. 

Daewoo E&C announced that it had meetings with officials from major Iranian contractors in Tehran and won two tentative deals worth $11.5 billion (13.29 trillion won) on May 3 to construct a petrochemical plant and road infrastructure.

The company signed a memorandum of understanding (MOU) with Bahman Geno Co., a local energy company, to build a large refinery plant for about US$10 billion (11.56 trillion won) along with Hyundai Engineering & Construction.

To be located in Bandar Jask on the Gulf of Oman about 1,600 kilometers southeast of Tehran and 860 kilometers east of the South Pars refinery plant, once completed the plant will have a daily refinery capacity of about 300,000 barrels of oil.

Bahman Geno issued a letter of intent to Hyundai E&C and Daewoo E&C in April for the engineering, procurement, construction (EPC) and financing deal and it will add local companies to carry forward the project, according to Iranian government regulations.

Daewoo E&C also signed an MOU for the construction of Tehran Shomal Freeway Lot 3. Under the agreement, the company will be in charge of engineering, procurement and construction for the project to build lot 3 of the 121-kilometer freeway to connect Tehran and the Caspian Sea, including a 47-kilometer tunnel and bridge ranging from Hezardram to Mazzan Abad. The deal has an estimated value of around $1.5 billion (1.73 trillion won).

President Park Geun-hye visited Iran from May 1-3 to discuss ways to promote business ties between the nations, leading a delegation of some 200 businesspeople from such areas as construction, energy and finance. Her visit, the first of its kind by a South Korean president since the two sides established diplomatic relations in 1962, came as Iran has been emerging as a high-potential market after years of international sanctions were lifted in January.

She led Korean builders’ objectives to lock up memorandums of understanding and preliminary agreements on railway, dam, petrochemical and hospitals projects with a value of 15-20 trillion won ($13-17 billion), according to industry officials.

Daelim Industrial said it plans to ink a $4.9 billion deal on railway projects and a preliminary agreement on a dam and water plant estimated at $2 billion next month. It has also been pushing for a piece of a petrochemical project, and hopes to sign a memorandum of understanding with the Tehran government during the delegation visit.

Hyundai Engineering Co. said it is set to clinch a $3.6 billion framework agreement with Kangan Petro Refining Co. to build a gas refining facility in South Pars, the world's largest gas field, located on the Persian Gulf. The firm also plans to sign a preliminary deal to participate in a private power plant construction project estimated at $500 million.

Hyundai Engineering & Construction Co. and POSCO Daewoo Corp., formerly Daewoo International Corp., will sign a deal with Iran's Health Ministry to build a hospital for Shiraz University of Medical Sciences, according to company officials.

Under the contract, Hyundai E&C will build the facility and POSCO Daewoo will provide the medical equipment, they said.

The large-scale deals in the offing are expected to give momentum to Korean companies, which have grappled with shrinking demand in the Middle East amid low oil prices.

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