A South Korean joint venture secured a $6.04 billion contract to build an oil refinery in Iraq, corporate sources said Wednesday.

The order won by the four builders, led by Hyundai Engineering and Construction Co. and GS E&C, represents the single largest industrial plant project won by local firms.

The order was placed by State Company for Oil Project and will be built in Karbala, some 120 kilometers southwest of Baghdad.

The construction is expected to take 54 months for a refinery that can process 140,000 barrels of crude oil per day into liquefied petroleum gas, gasoline, diesel and other petroleum products.

"The project is noteworthy because companies carefully checked profit margins and overall business value before trying to win the bid," a press release by Hyundai E&C said.

It said the tie-up between rivals to win the lucrative contract can set a precedent for similar arrangements in the future and prevent the kind of cut-throat competition cited as undermining the health of many local construction companies in the past.

Beside Hyundai E&C and GS E&C, the joint venture is made up of SK Engineering and Construction Co. and Hyundai Engineering Co.

The two Hyundai companies have a combined 37.5 percent stake in the cooperative effort, with GS and SK controlling 37.5 percent and 25 percent, respectively.

The stakes translate into little over $2.26 billion each for GS E&C and the two Hyundai affiliates combined, and $1.51 billion for SK E&C.

South Korean companies will draw the building plans, manage procurement and carry out the construction work. They will operate the plant for a year after completion before handing it over to SCOP.

Hyundai E&C, which first set foot in Iraq in 1976, has extensive experience in industrial plant construction, while its subsidiary Hyundai Engineering has a proven track record in gas turbine power generation.

The contract marks the first time GS E&C has made inroads into the oil-rich Middle East country, while SK wants to use the latest deal to further diversify its business portfolio. (Yonhap)