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Daewoo E&C Signs MOU for Billion Dollars Worth Projects with Iran
Active Move in Iran
Daewoo E&C Signs MOU for Billion Dollars Worth Projects with Iran
  • By marie
  • June 22, 2016, 08:15
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Park Young-Sik, president of Daewoo Engineering & Construction (front line, first from the left) pose for a photo-taking, after signing the business agreement with Bahman Geno Refinery Co. on May 2.
Park Young-Sik, president of Daewoo Engineering & Construction (front line, first from the left) pose for a photo-taking, after signing the business agreement with Bahman Geno Refinery Co. on May 2.

 

In the early 1980s, when Korean construction companies competitively expended their businesses to the Middle East, Daewoo Engineering & Construction (Daewoo E&C) rather turned their eyes to Africa, where no competition awaited. Subsequently, they succeeded in expending its business to the Middle East in a roundabout way.  

Daewoo E&C expended their business into Libya and Nigeria, pioneering the new markets with good achievements, which brought the Korean builder a chance to reach out its business to the Middle East naturally. Following the outbreak of Iran-Iraq war in 1984, Khorramshahr port, the biggest trade port of Iran, was disabled. As a result, Iran had no choice but to shift the distribution foothold to the only available port, Bandar Abbas port, for which the construction of a railway was inevitable. In 1984, Daewoo E&C won a contract to construct the Lot 6 of the Bandar Abbas-Bafgh railway, which became its first stepping into the Iranian market.

Starting from it, Daewoo E&C continued expending its business into Saudi Arabia and Iran, carrying out projects including the construction of fire extinguishing facilities and installation fire detection system, worth US$15.25 million, for Saudi Arabian oil company Aramco in 1994. Additionally, the company consecutively won the contract to construct the Lots 4-B and 4-A of Bandar Abbas-Bafgh railway. Daewoo E& C showed a perfect performance in difficult mountainous terrain and rugged environments like flood, and carried out a variety of construction projects including the restoration construction of Kharg Island oil terminal in 1991.

Daewoo E&C extended its entrance into the other Middle Eastern countries, including Qatar, Oman, and UAE. Successfully conducting diverse constructions, the Korean builder proved its reputation to the governments and residents of the countries. In particular, the successful construction of Qatar repair dockyard and Oman Duqm repair dockyard, the first construction of its kind in the Gulf region, made a big contribution to the regional development.

In May this year, President Park Geun-Hye made a state visit to Iran to meet President Hassan Rouhani. Daewoo E&C accompanied the visit as a member of the economic mission, and signed two Memorandums of Understanding for constructions of road and refinery facilities worth a total of US$1.5 billion. Daewoo E&C and Hyundai Engineering & Construction signed a US$10 billion worth joint business agreement with Bahman Geno Refinery Company to construct refinery facilities. Moreover, the construction of Tehran-Shomal freeway Lot No. 3, which will be conducted by Daewoo E&C alone, is estimated to be worth US$1.5 billion. Amid the continuously shrinking construction of petrochemical plants due to the prolonged low oil price, new construction orders from Iran might be an opportunity for domestic builders to break through the recession. In addition to the plant construction, various infrastructure construction projects for power generations, bridges, roads and railways are expected to come out in Iran.

However, many obstacles are existing as there are high expectations. An official of Daewoo E&C said, “Korean construction companies are watching Iran as an emerging market. However, the long lasting restrictions including economic have left some problems to be solved. In particular, it is difficult to arrange the financing essential to the construction market since dollar or euro are not accepted in Iran. We understand there are some going-on efforts of the domestic construction companies and the Korean government to solve the problem." He added, "We hope the Iranian government also put a joint effort to solve the problem by providing the government guarantee aggressively.”

Daewoo E&C is actively proceeding with constructions in Iran and neighboring countries, while expanding the area of construction to infrastructure in the Middle East. Moreover, the Korean builder is carrying out construction projects including New orbital motorway in Qatar, S3 power plant in UAE, research reactor in Jordan, JAZAN refinery in Saudi Arabia, and AL-Raw port in Iraq. In March this year, Daewoo E&C and Hanwha Engineering & Construction signed an MOU for a new town construction to accommodate one hundred thousand households.

In the meantime, in South Asian region, Daewoo E&C is participating in the construction of a new town called “Star Lake” in Hanoi, the capital of Vietnam. The development of the new town, which is built on the land of 1,863,000㎡, is led by Vietnam THT company, a subsidiary 100% owned by Daewoo E&C.