South Korea and Saudi Arabia Sign 25 Investment Contracts and MOUs

South Korea and Saudi Arabia signed 25 investment contracts and business cooperation MOUs on Nov. 17 in line with the visit to Seoul of Crown Prince Mohammed bin Salman, the real power holder of Saudi Arabia.

The crown prince arrived in Seoul on Nov. 16, one day ahead of the original schedule. The purpose of his visit is to find partners to join his country’s Neom City project, which is to build a smart city with an area of 26,500 square kilometers by investing US$500 billion.

He is scheduled to meet with South Korean President Yoon Suk-yeol in the morning of Nov. 17 and South Korean CEOs in the afternoon, including Samsung Electronics chairman Lee Jae-yong, SK Group chairman Chey Tae-won, Hyundai Motor Group chairman Chung Eui-sun and Hanwha Solutions vice president Kim Dong-kwan.

The scale of the projects the two countries agreed to jointly promote amounts to tens of trillions of won. Expectations are growing that if cooperation proceeds as planned, Korea will enjoy a 'second Middle East boom' following the 1970s.

According to the Ministry of Trade, Industry and Energy, Korea and Saudi Arabia held an investment forum at the international conference hall of the Korea Chamber of Commerce and Industry and signed a series of investment agreements and business cooperation MOUs. The project cost scheduled for each deal is said to bein the unit of trillion won.

The forum was attended by Industry Minister Lee Chang-yang and Saudi Investment Minister Khalid Al-Falih, who watched the MOU signing ceremony. 

Of note is the cooperation project between Hyundai Rotem, a railroad vehicle affiliate of Hyundai Motor Group, and Saudi Arabia. Hyundai Rotem signed an MOU with the Ministry of Investment of Saudi Arabia for railway cooperation related to the Neom City project. The main point is to cooperate to build the railway infrastructure of Neom City, a US$500 billion new city project being promoted by Saudi Arabia.

The MOU also included the joint development of a hydrogen locomotive with Saudi Arabia. If Hyundai Rotem wins an order for high-speed trains in Saudi Arabia in the future, it will be the first export of domestic high-speed trains. Saudi Arabia's high-speed rail project is worth 2.5 trillion won.

Cooperation is also promoted in the next-generation energy sector. Five companies, including Korea Electric Power Corp. (KEPCO) and Samsung C&T, signed an MOU with Saudi Arabia's sovereign wealth fund (PIF) to develop green hydrogen. It is a project to build a green hydrogen and ammonia production complex on a site of 400,000 square meters on the Red Sea coast of Saudi Arabia. The companies plan to build a production complex with an annual production capacity of 1.2 million tons from 2025 to 2029. The project cost is US$6.5 billion.

In the construction field, Samsung C&T signed an MOU with PIF for cooperation in a modular house construction project. Samsung C&T will build modular houses in Neom City. The project's cost is US$4 billion. Daewoo E&C signed an MOU with Alfanar, a Saudi construction company, to cooperate extensively in the oil, gas, and petrochemical business. Kolon Global has decided to cooperate with a local company to establish a smart farm joint venture.

Meanwhile, S-Oil, a subsidiary of Saudi Arabia's state-owned Aramco, recently announced its plan to promote the 'Shaheen Project. The company plans to invest about 8 trillion won to build an ultra-large petrochemical complex in Ulsan. It is the largest ever single foreign investment in Korea.