The Export-Import Bank of Korea put on hold the issue of a letter of intent (LOI) for Hyundai Engineering’s oil refinery construction project in Moscow, Russia. Some experts point out that this signifies the Korean government’s participation in the economic sanctions against Russia led by the U.S. and the E.U.
Such LOIs for financial support are used to confirm that a government is willing to provide project funds in the name of its bank. The documents have been customarily required by ordering bodies, although they have no binding power.
The project in question was placed by Gazpromneft, a subsidiary of Gazprom, to build a large-scale oil refinery with a US$1 billion investment. Hyundai Engineering had passed the pre-qualification before making a request for the LOI for the tender. However, the bank refused to provide the document, at the request of the Ministry of Strategy and Finance according to some news sources, until the bidding deadline on Oct. 29, and Hyundai Engineering had to join the bidding on the condition that it would submit the LOI later.
“It is not true that we called for the bank to not issue the LOI,” a Ministry representative explained, adding, “However, it is true that the bank did not issue the LOI, as the National Security Council is discussing economic sanctions against Russia.”