A consortium of Korean engineering firms has won an estimated $6 billion contract to build a new oil refinery in Iraq, in the largest deal ever won by Korean firms in the country.
The 140,000-barrel per day refinery is slated to be built in Karbala, some 120 kilometers southwest of Baghdad, with construction expected to take four-and-a-half years.
The joint venture behind the project is led by Hyundai Engineering and Construction, with a 37.5% stake worth $2.265 billion. GS Engineering and Construction also holds a 37.5% stake, while SK Engineering and Construction holds a 25% stake.
France’s Technip will take charge of the project management consultancy for the refinery.
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The joint venture will build and operate the refinery for one year, then handing it over to the state-run company, Iraqi State Company for Oil Projects (SCOP).
The new refinery is part of Iraq’s long-term plans to construct four new refineries to add an eventual 750,000 barrels per day of capacity. Three other refineries are slated for Nassiriya, Maysan and Kirkuk—the latter located in territory disputed by the Iraqi central government and the Kurdistan Regional Government (KRG) in the Kurdish region of northern Iraq.
The deal is a major coup for South Korean firms, which have been heavily courting the Middle East in recent years, particularly looking for construction projects with a focus on the energy sector and residential buildings.
Last year, Hyundai Heavy Industries won a $3.3-billion order to build a steam power plant in Saudi Arabia after a series of similar deals in the country.
In 2012, Hanwha Group won a $7.75 billion deal with Iraq to build 100,000 homes on the outskirts of Baghdad.
By James Burgess of Oilprice.com