Arabtec has forged a partnership with Samsung Engineering to expand its presence in the region's lucrative energy sector.
The UAE-based construction company and the South Korean contractor yesterday signed a memorandum of understanding to create Arabtec-Samsung Engineering, a joint venture that will bid for large energy projects.
"Arabtec-Samsung Engineering will be well positioned to capitalise on the exciting growth opportunities in oil and gas, power and infrastructure," said Hasan Abdulla Ismaik, Arabtec's managing director and chief executive.
Arabtec will hold the majority in the joint venture, which is split on a 60/40 basis.
Samsung Engineering is already a major player in the sectors that will be targeted by the joint venture and has an order backlog worth US$10 billion (Dh36.73bn) in the region. "Through this partnership with Arabtec to form a joint venture, we hope to expand our presence in Mena [the Middle East and North Africa]," said Park Ki-seok, the company's president and chief executive.
The two companies have cooperated in the past. Arabtec joined forces with Samsung Engineering's sister company Samsung C&T to construct Burj Khalifa in Dubai, the world's tallest building that was completed in 2010.
The joint venture will start bidding for contracts this year, and concentrate on large projects. The new company "will focus on winning large-scale contracts, which can range from $3bn to $10bn in total value", Arabtec said.
Buoyed by high oil prices, ambitious production increase targets and a push into downstream diversification, the region's energy sector is subject to heavy investment. The Arab Petroleum Investments Corporation estimates that $740bn will be spent on energy projects in the Mena region in the five-year period from 2013.
Meed, which specialises in the project market, calculates that projects planned or under way in the region's energy, power and infrastructure sectors are worth a combined $1.56 trillion.
Samsung Engineering is part of a group of South Korean engineering, procurement and construction players that have come to dominate the Arabian Gulf's energy project market in recent years.
The company is heavily involved in growing the region's upstream and downstream capacity, and adding to its power and water infrastructure.
Its current projects include Abu Dhabi National Oil Company's new refinery in Ruwais, where Samsung Engineering is constructing a key component under a $2.7bn contract. It is part of a consortium that last December was awarded a $3bn contract to build a desalination plant in Yanbu, Saudi Arabia.
Arabtec is one of the Gulf's largest construction companies and can boast a string of recent bidding successes. It won the contract to construct the Midfield Terminal at Abu Dhabi International Airport, as well as the bid to build the emirate's Louvre Museum on Saadiyat Island.
Arabtec already has a foothold in the oil and gas construction business through Target Engineering, a Dubai energy contractor. Arabtec holds 60 per cent in the company.