South Korean construction companies are set to sign a series of big development projects in Iran when a business delegation visits the Middle Eastern nation next month to promote bilateral economic ties, industry officials said Saturday.
President Park Geun-hye is to visit Iran from May 1-3 to discuss ways to promote business ties between the nations, leading a delegation of some 200 businesspeople from such areas as construction, energy and finance.
Her visit, the first of its kind by a South Korean president since the two sides established diplomatic relations in 1962, comes as Iran has been emerging as a high-potential market after years of international sanctions were lifted in January.
Leading Korean builders plan to set memorandums of understanding and preliminary agreements on building railway, dam, petrochemical plant and hospitals, with the value of contracts estimated around 15-20 trillion won ($13-17 billion), according to industry officials.
Daelim Industrial said it plans to ink a $4.9 billion deal on railway projects and a preliminary agreement on a dam and water plant deal estimated at $2 billion next month. It has also been pushing for participating in a petrochemical project, hoping to sign a memorandum of understanding with the Tehran government during the delegation visit.
Hyundai Engineering Co. said it is set to clinch a $3.6 billion framework agreement with Kangan Petro Refining Co. to build a gas refining facility in the South Pars, the world's largest gas field located in the Perisan Gulf. The firm also plans to sign a preliminary deal to participate in a private power plant construction project estimated at $500 million.
Hyundai Engineering & Construction Co. and POSCO Daewoo Corp., formerly Daewoo International Corp., will sign a deal with Iran's health ministry to build a hospital for Shiraz University of Medical Sciences, according to the company officials.
Under the contract, Hyundai E&C will build the facility and POSCO Daewoo will provide the medical equipment, they said.
The large-scale deals in the offing are expected to give momentum to Korean companies, which have grappled with shrinking demands in the Middle East amid low oil prices.
“It would take some time to sign formal agreements and confirm the contracts in Iran. But at least they would inject fresh momentum into the sluggish Middle Eastern construction market, dragged by a prolonged oil price slump," said a senior official at a Seoul-based construction firm.
With a population of over 80 million, the Middle East country abounds in natural resources, holding the world's fourth-largest oil reserves and the second-largest gas reserves.
In the past decades, South Korean builders had clinched deals worth $12 billion with Iran, but since 2009 there have been few deals, due mostly to the economic sanctions that the United Nations imposed on the country for its nuclear weapons program in 2010. (Yonhap)
