On Dec. 13, Korea Eximbank (www.koreaexim.go.kr, Chairman & President Yong Hwan Kim) announced that the Bank will provide USD 1 billion in financing for the Barzan Gas Project participated by Hyundai Heavy Industries and five domestic SMEs. The financing amount is the largest provided to a single project.
This project is the largest gas facility project in Qatar and is promoted by Qatar Petroleum and Exxon Mobil, with total financing of USD 10.3 billion.
Hyundai Heavy Industries will oversee establishment of an offshore plant including construction of mining facilities in North Field* and design and installation of underwater pipelines while JGC Corporation** of Japan and five Korean SMEs oversee construction of a plant on land for production of fossil fuel for the power plant and manufacture of petrochemical products.
*Estimated to hold approximately 14% (896 trillion cubic feet) of the world’s supply of natural gas.
** Construction company established in 1928 renowned for its leading technologies in the field of industrial plants.
With plant markets in developed countries in decline from the fallout of the Eurozone crisis, large Korean corporations and SMEs are collaborating in megaprojects in the Middle East, where infrastructure construction is actively being promoted with oil money.
Most notably, Korea Eximbank’s decision to provide financing amounts in proportion to the scale of Korean equipment and materials used in plant projects from their bidding stages, contributed to increasing Korean exports and the number of contracts won by Korean companies.
JGC Corporation, overseeing plant construction on land, initially planned to conclude a USD 100 million contract for supplies from three Korean SMEs.
However, after Korea Eximbank requested that JGC raise the volume of Korean contents in order to increase exports by Korean SMEs and create jobs, a USD 190 million contract was concluded with five Korean SMEs.
The Bank’s strengthened comprehensive support networks with Korean companies for large-scale projects also contributed to the conclusion of this contract.
Korea Eximbank had successfully induced co-financing from 34 global financial institutions including ECAs (JBIC, NEXI of Japan, and SACE of Italy), international commercial banks, and 14 Middle East financial institutions despite difficult market conditions.
Most notably, three financial institutions in the Middle East such as Qatar National Bank, which Korea Eximbank had concluded MOUs with last September for cooperative networks,*** participated as co-financing institutions. The Barzan Gas Project is the first fruit of such efforts for network development.
***In order to develop comprehensive networks to finance projects in the Middle East and win more project contracts in the Middle East market (the largest plant market for Korean companies accounting for 66% of the total plant contracts last year), representatives from Korea Eximbank visited five Middle East countries last September and November, namely, Saudi Arabia, the UAE, Qatar, Kuwait, and Egypt. The Bank provided comprehensive marketing for government agencies, contracting companies, and local financial institutions and finally concluded MOUs with nine banks.
A representative from the Bank stated, “The fact that Korea Eximbank was able to participate in this mega-big project implies that the Bank’s reputation has increased in the global project financing market. We will increase utilization of funds in the Middle East to facilitate participation by Korean companies in large-scale projects and preparation of financing plans.”
