The kingdom will remain the regions focal point for major power schemes in the short term
The signing of more than $4bn-worth of contracts in one week shows that Saudi Arabia remains the regions most lucrative power projects market.
The award of the $3.3bn contract to South Koreas Hyundai Heavy Industries (HHI) to build the Shuqaiq power plant is the largest engineering, procurement and construction (EPC) award in the Middle Easts power sector in 2013. Along with the $1bn award by Saudi Aramco to Germanys Siemens for components for the worlds largest gasification facility the 4,000MW Jizan gasification power plant the schemes are evidence that the kingdom is pressing ahead with efforts to boost domestic and industrial power capacity.
The award of the Shuqaiq project further signifies the dominance that South Korean contractors have gained in Saudi Arabias power sector in recent years. Since the beginning of 2010, South Korean firms have won more than 60 per cent of the major power deals in the kingdoms power sector. In the past 10 months, HHI alone has been awarded contracts to build more than 5,000MW of capacity.
Saudi Arabias proposed EPC and independent power project programmes will continue to offer opportunities for work over the next decade, with more than 30,000MW of schemes in various stages of planning.
Riyadhs ambitions are also evident in the progress of the Jizan project. The award of the contract shows the kingdom is keen to build capacity to stimulate economic diversification and satisfy domestic demand for power.
While the emerging markets of Iraq and North Africa will begin to offer increasing opportunities for international power firms, Saudi Arabia will remain the regions focal point for major schemes in the short term. The difficulty for foreign firms will be outbidding the South Koreans.