[Courtesy of Hyundai Heavy Industry]
South Korea’s Hyundai Heavy Industry (HHI) and state-owned oil giant Saudi Aramco have agreed to jointly collaborate on business development opportunities in Saudi Arabia, a move that could help pave the way for a business turnaround for the world’s biggest shipbuilder.
Amin H. Nasser, president and CEO of Saudi Aramco and Ki-sun Chung, head of corporate planning at HHI, signed a memorandum of agreement (MoU) in Saudi Arabia on Nov 12 (local time).
The MoU lays out a comprehensive, multi-faceted business cooperation framework in areas such as engineering, procurement and construction (EPC), downstream, and the development of a casting and forging facility. It also covers the development of a world class maritime yard and the advancement of maritime diesel engine manufacturing in Saudi Arabia, HHI said in a news release.
"The partnership between the two industrial behemoths not only means a great opportunity to enhance Korea's shipbuilding and EPC businesses, but also extends the Hyundai Groups’ contribution to the Kingdom stretching back to the 1970s when it was awarded a contract to undertake development of the Jubail port (King Fahd industrial port) project. This signing is significant as it provides the potential for the creation of another Jubail that creates tremendous growth opportunities for HHI.,” Chung said.
Hyundai Heavy is desperately trying to find a new growth engine after the company reported huge operating losses for the eight consecutive quarters, hit hard by worldwide shipbuilding recession.
The strategic collaboration btewen HHI and Aramco was initiated when Saudi Aramco’s board of directors visited HHI’s Ulsan shipyard last May.
Saudi Aramco has championed the development of a comprehensive maritime yard within Ras Al-Khair, in coordination with the National Shipping Company of Saudi Arabia (Bahri) and HHI as potential partners. The yard will leverage the companies’ expanding offshore business to accelerate localisation efforts of the kingdom’s young and promising maritime industry and its associated supply chain, the company said.
“Moreover, the joint effort enables the partners to cater to growing Middle East vessel demand and to enjoy advantage of the yard to build vessel types that are no longer profitable to be built in Korean shipyards,” the statement said.
“Another potential business segment is the engine business, which is closely associated with shipbuilding, and which both parties will explore with a view to a future joint venture,” it added.
“It is the company’s common view, that this strategic alliance enables the HHI and Saudi Aramco to serve growing demand in the Middle East in the various new business areas.” It said.
“Finally and as expressed by Mr. Chung, HHI appreciates this collaboration as a turning point as much as an effective rebirth of the group.
By Alex Lee
reporter
Park Sae-jin
swatchsjp@ajunews.com
