Hyundai Heavy Industries and Saudi Aramco Sign MOU for New Collaboration

Hyundai Heavy Industries (HHI) Group entered into a general memorandum of understanding (MOU) with Saudi Aramco, the world’s leading integrated energy and chemicals company, to jointly collaborate on business development opportunities in the Kingdom of Saudi Arabia.

The signing ceremony was presided by Mr. Amin H. Nasser, President and CEO of Saudi Aramco at the headquarters of Saudi Aramco in Dhahran, Mr. Ki-sun Chung, head of HHI Corporate Planning, accompanied by Mr. Jeong-Hwan Kim, COO of HHI Shipbuilding, and Mr. Cheul-ho Park, COO of HHI IP&E (Industrial Plant and Engineering), signed a general MOU with Saudi Aramco’s President and CEO. The MOU lays out a comprehensive multi-faceted business cooperation framework going forward, in areas such as EPC, downstream, casting and forging in addition to initiatives in progress to support the Maritime Industry and diesel engines manufacturing in Saudi Arabia.

The strategic collaboration discussion was initiated when Saudi Aramco’s Board of Directors visited HHI’s Ulsan complex in April 2015. Mr. Chung, who represented HHI for all relations with Saudi Arabia and Saudi Aramco, led the efforts that culminated with the signing ceremony.

Mr. Chung said "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."

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 partners expanding offshore business to accelerate localization efforts of the Kingdom’s young and promising maritime industry, and its associated supply chain. HHI is expected to win orders of building vessels while participating in construction and operation of the maritime yard and to gain opportunities of various value added services.

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.

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. In particular, HHI-developed HiMSEN can benefit from the joint development to expand its market presence. The endeavor includes expanding HiMSEN-based Engine for Marine and Power Plant businesses in the region and can serve regional production stronghold as well as meeting growing demand of power from developing countries surrounding regions.

Another strategic partnership under development goes to HHI's Middle East EPC business. Already centered on the region, the current HHI's EPC business can be the seed for a joint cooperation through which a regional EPC Champion can be created with a base in Saudi Arabia, catering for enhanced execution capacity to undertake the Kingdom’s expanding infrastructure investments. The collaborative partnership extends as well to opportunities in downstream and electric equipment manufacturing. The two companies agree to further explore other collaboration opportunities as they arise. 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. Finally and as expressed by Mr. Chung, HHI appreciates this collaboration as a turning point as much as an effective rebirth of the group.