Saudi Arabia’s petrochemicals boom has come at an opportune time for South Korea’s Daelim Industrial Company, the region’s top oil, gas and petrochemicals engineering, procurement and construction (EPC) contractor.

The company picked up $4.87bn-worth of contract awards in the kingdom from July 2011 to June 2012. It secured packages at all of the major active petrochemicals projects in Saudi Arabia, including the Sadara Chemical Company and elastomers projects in Jubail in the Eastern Province, as well as the PetroRabigh phase 2 project on the Red Sea coast.

According to MEED’s bespoke research arm, MEED Insight, Daelim Industrial currently has $10.7bn-worth of contracts in the oil, gas and petrochemicals sectors under execution in the Middle East. The figure does not include the $1.4bn contract to build the Shoaiba 2 combined cycle power plant in Saudi Arabia.

Daelim’s corporate history

Daelim Industrial has earned a reputation as one of the most aggressive bidders for new projects in the region. It commenced operations in 1939 and ranks as South Korea’s oldest construction company. Compared with rivals such as Hyundai Engineering & Construction, Samsung Engineering & Construction and Daewoo Engineering & Construction, the firm is much smaller. It is South Korea’s fifth largest builder and employs more than 9,000 people. 

According to its annual report, Daelim Industrial recorded a backlog of $20.6bn at the end of 2011, of which $6.7bn was tied up in overseas plant works. Daelim also recorded a net profit of $380m for 2011.

The company claims its investment in research and development into core process plant technologies and design has enabled it to remain competitive when bidding for work. 

Like most South Korean companies, Daelim Industrial has a presence in several sectors in its home market. The firm undertakes work in building and housing construction, civil engineering, industrial facilities, petrochemicals, information and communications, as well as automobiles. By comparison, in the Middle East market, it concentrates on complex process plants with 12 affiliates.

Daelim Industrial was the first South Korean construction company to secure work in the region, winning basic civil and construction works packages in Saudi Arabia in 1974.

With offices in 10 countries worldwide, including the US and China, Daelim has plans to expand its global operations. The company has identified the gas boom driven by the US’ shale gas reserves and increased global trade in liquefied natural gas (LNG) as indicators that there is growth potential in emerging economies. There is also renewed interest in the US in petrochemicals production. In the Middle East, the company has expanded its interests, most notably in the power sector. It has also been bidding on several high-profile projects in the metals and industrial sectors.

Future bids for Daelim

Daelim Industrial is expected to make competitive bids for several high-value projects in the latter half of 2012. These are set to include Saudi Aramco’s $7bn Jizan refinery in the south of Saudi Arabia, as well as the $1bn Laffan condensate refinery expansion in Qatar.

“Daelim Industrial has enjoyed significant success in Saudi Arabia and there is still a lot of work to be won here,” says a senior Saudi Arabian oil executive. “But with their backlog, many must be wondering how much spare capacity they have.”

The Middle East’s downstream oil and gas sector is enjoying a period of growth and Daelim Industrial is well placed to capitalise with its specialist skills.

A period of consolidation will come when the cycle turns back towards upstream contracts, and until that time Daelim believes it has the capacity to win more large-scale mega-projects in the Middle East.