Shipbuilding Partners
Hyundai Heavy Industries (HHI) is joining hands with the world’s largest oil company Aramco to construct a joint shipyard in Saudi Arabia and proceed with large joint projects in various areas, including shipbuilding, engine and plant. As the project to build the partnership between the two companies is led by Chung Ki-sun, Senior Vice President of HHI Corporate Planning, grandson of Hyundai Group founder Chung Ju-yung and son of HHI largest shareholder Chung Mong-joon, he is expected to engage in management in earnest and strengthen his position in HHI in the future.
HHI announced on Nov. 11 (local time) that it has signed a memorandum of understanding (MOU) with Aramco, a state-run oil company in Saudi Arabia, promising cooperation in shipbuilding, engine development and plant businesses. Aramco is the world’s largest oil company that produces 15 percent of the world’s crude oil and is also widely involved in oil transportation, marine engineering and plant construction, exercising a huge influence on basic industries.
With the latest MOU, HHI has secured priority rights in the heavy industries sector, including shipbuilding, engine and plant construction, in Saudi Arabia, and is able to expand to the Middle Eastern market in earnest. HHI will first cooperate with Aramco to jointly build a dockyard in Saudi Arabia, in which other local companies like a state-run marine transportation company Bahri will also participate.
HHI will earn more chances to win shipbuilding contracts in Saudi than other international rivals. Some say that the strategic relationship with Aramco helped the company to receive the US$1 billion (1.16 trillion won) order to construct 10 very large crude carriers (VLCCs) from Bahri in May. The two companies will also jointly working on developing engines for vessels, which are closely related to shipbuilding. HHI is expected to earn chances to export its in-house HiMSEN engines to the Middles Eastern market and locally produce them.
The two will also work together in the plant construction business. Since most of HHI’s plant-focused businesses were already in the Middle East, the company expects to expand its share even more, reducing potential risks on large-scale EPC projects by getting financial support and manpower from Aramco.
Aramco can also greatly benefit from the MOU. The company has believed that it is hard to survive any longer just with oil business. Aramco needed to rebuild the economy through new large-scale projects.
The MOU was led by HHI’s head of corporate planning, Chung Ki-sun, from the start to the end. Al Nasser, President and CEO of Saudi Aramco, said at the MOU signing ceremony, “Saudi Arabia has had a special bond with Honorary Chairman Chung Ju-yung and HHI from the Jubail Commercial Port construction project in Saudi Arabia in 1976. I think the astuteness to seize business opportunities in Saudi Arabia is in the DNA of the founder family.”