Hyundai Heavy Industries (HHI) is the world’s biggest shipbuilder. But HHI has hit a series of jackpots in the overland plant segment, including thermal power plant construction, outside of its conventional mainstay business of shipbuilding.
In the latest feat, HHI snatched a $3.3 billion deal for the Shuqaiq steam power plant project with state-run Saudi Electricity Company (SEC) in Riyadh on Aug. 4. HHI CEO Lee Jae-seong and SEC Chairman Saleh bin Hussein Al Awaji signed the agreement on the project, which calls for the construction of a thermal power plant with a 2,640-megawatt capacity near the Red Sea by 2017.
The Korean shipbuilding giant chalked up $2 billion in the combined value of overland plant orders it landed in 2010 when the global shipbuilding industry suffered a severe recession, and HHI saw the value of its orders from the global overland plant market amount to $4.1 billion last year, bolstering its presence in the segment. HHI’s latest feat will likely push it past $5 billion in the combined value of overland plant orders the company will land during the whole of this year, analysts and HHI officials said.
An HHI official said with no end to the prolonged shipbuilding recession in sight, HHI has reaped remarkable achievements in the overland plant segment.
HHI is still proud of its pedigree in the overland plant business. The recent series of jackpots is owed to the expertise and experiences the company has accumulated for almost 40 years since its participation in the construction of the Saudi Arabian port of Jubail in 1976.
The latest deal from Saudi Arabia will bring to 12,000 megawatts the combined generation of the power plants HHI has already completed or will build, which account for one-fifth of the Middle Eastern country’s total production.
HHI will carry out the construction of the latest thermal power project on a turnkey basis including engineering, procurement, construction, commissioning, and testing. The latest deal comes on the heels of HHI’s landing of a $3.2 billion order to build Jeddah South Thermal Power Plant from Saudi Electricity Company (SEC) in Saudi Arabia last October 15. It is rare for HHI to clinch two mega projects in a short period of time from SEC, given the difficulties in securing design manpower, construction management, and the supply of materials.
Chon In-soo, head of HHI’s plant business division, said despite the global economic recession, Middle Eastern countries have aggressively made investments into key infrastructure thanks to crude oil price hikes, a rising population, and economic growth. In particular, as the Saudi Arabian government continues pushing for the expansion of power and desalination facilities as policies to improve the public welfare, he continued, HHI expect more projects to follow in the years ahead.
HHI has already completed power and desalination projects with a combined production capacity of 9,000MW and valued at $9.2 billion in Saudi Arabia, Kuwait, and Qatar. The Korean company is now building power and desalination facilities with a combined production capacity of 3,000MW and valued at $3.5 billion.
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HHI CEO Lee Jae-seong
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