[Neom City Contract Battle]②Competition with China, the US, and Europe... "Securing Competitiveness Based on Trust"

India L&T and China CSCEC Win Orders
"Korea Holds Advantages in Petrochemicals, Refining, and Desalination"

Construction site of NEOM City in Saudi Arabia.
[Photo by Doosan Infracore]

[Asia Economy Reporter Noh Kyung-jo] "Compared to Japan, China is more active, and India is equally enthusiastic about the Saudi Arabia NEOM City project. Not to mention American and European companies." (A construction company official)

‘Team Korea,’ led by Samsung C&T and Hyundai Engineering & Construction, has thrown its hat into the ring for the NEOM City project bid. NEOM City was recently selected as the host city for the 2029 Winter Asian Games, which is expected to accelerate its development. Especially since this is a large-scale project proceeding amid a global economic downturn, leading companies from various countries are showing keen interest. Domestic construction companies are also preparing bids and competing, hoping for a 'second Middle East boom.'

According to the construction industry on the 14th, the Ministry of Land, Infrastructure and Transport plans to visit Saudi Arabia early next month with representatives from construction companies and startups (such as mobility). Construction companies accompanying the visit include Samsung C&T, Hyundai Engineering & Construction, GS Engineering & Construction, and Daewoo Engineering & Construction. The plan is to directly inspect the NEOM City project site and consolidate bidding capabilities through collaboration between the public and private sectors.

Looking at the major NEOM City-related projects ordered so far, the Helios green fuel renewable energy project was awarded last November to Larsen & Toubro (L&T), India’s largest construction company. L&T, headquartered in Mumbai, is a defense company that entered the construction industry near the end of World War II, importing core technologies and building competitiveness.

Air Products, headquartered in Pennsylvania, USA, is conducting the world’s first commercial-scale green hydrogen production project related to NEOM City. Air Products is the world’s largest hydrogen producer with proprietary technology capable of extracting hydrogen from various raw materials such as natural gas and petroleum byproducts. German company ThyssenKrupp is also participating in related projects.

As part of the development of The Line, the backbone infrastructure running tunnel package was awarded in June this year to a consortium of Saudi local company Shibh Al Jazira Contracting, China State Construction Engineering Corporation (CSCEC), and Spanish FCC Construction. Samsung C&T and Hyundai Engineering & Construction consortium have also entered some parts of the package.

Among them, CSCEC ranked 9th in the '2022 International Contractors' list published by ENR, a US construction and engineering industry magazine, which is four places higher than Hyundai Engineering & Construction, the highest-ranked domestic company at 13th. Additionally, China has held the top spot in overseas construction sales by country for many years.

NEOM City The Line Image
Photo by NEOM Official Website

A B construction company official said, "There are not just one or two NEOM City project orders, and companies that have already won contracts will repeatedly enter bidding competitions," adding, "We cannot say that domestic construction companies have an advantage in all processes, but we will do our best."

He continued, "Since it is about building a new city, orders are being placed step-by-step starting from foundational work or large-scale projects. You cannot lay railroads without tunnels," adding, "Currently, we are preparing bids for additional orders such as terminals, residential and tourism complexes, and hotels."

The government views that simple civil engineering and solar power projects are dominated by Chinese companies, which have advantages in low-price competition and financial support. Bridge, railroad, and port projects are being competed for by Korea, China, and others. Plant projects are considered favorable to Korean, American, and European companies. It is known that the Saudi government still does not fully trust Chinese technology.

The Ministry of Land, Infrastructure and Transport said regarding the competitiveness of domestic companies in Saudi Arabia, "Since the 1970s, we have accumulated various experiences and technological capabilities by carrying out major construction and plant projects in Saudi Arabia and have secured trust from clients," adding, "We have competitiveness in petrochemical and refining (Jafurah and Mazan regions), desalination (Yanbu and Shuwaibah regions), and power generation sectors rather than simple civil engineering."

It added, "We are leading the smart city construction sector by combining new city development experience with information and communication technology (ICT)," and said, "It is worth participating in mega projects such as NEOM City and Qiddiya."