Koreans come of age in Abu Dhabi power sector

05 January 2010

There can be no doubt that South Korean contractors have cemented their international position

Only a few weeks ago it seemed the chances of a South Korean consortium winning the GCC’s first nuclear power project were slim. The fact that it did is good for both the Korean contractors and for the client, Abu Dhabi.

The significance of the project cannot be underestimated. The $40bn deal was not only the largest contract to be awarded in the Gulf last year but, outside the defence sector, it is also probably the largest-ever contract award in the region.

For South Korea it is a major coup and marks a watershed for Korean companies, which for years struggled to establish a strong reputation for themselves in the region.

They have certainly come a long way since the late 1990s, when oil and gas clients refused to prequalify them for technically challenging projects on the grounds that they lacked experience. They have built up their reputation since then and most clients are now happy to include Korean firms on their bid lists.

Having outbid better-established competitors from the US and France for the nuclear deal, there can be no doubt that South Korean companies have now cemented their position in the top rank of international contractors.

But the award is also a positive sign for Abu Dhabi. When the client repeatedly allowed the French and US teams to revise their bids during the year, to bring them closer to Kepco’s lower price, it appeared to signal that the UAE would do all it could to hand the deal to one of the Western consortiums.

But the Koreans’ win shows that the individual merits of the bids were ultimately paramount, rather than the underlying politics. Given the often delicate political nature of nuclear deals, that, too, is worth applauding.

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