Hyundai wins $ 1.2 bn contract for gas plant in Iran

19-03-02 Hyundai Engineering & Construction won a $ 1.2 bn (EUR 1.4 bn, £ 840 m) contract to build a gas processing plant in Iran, underlining the South Korean engineering industry's strong presence in the oil and gas fields of the Middle East. But energy projects closer to home have been causing even greater excitement in South Korea in the past few days, after the country's 33-year hunt for offshore fossil fuel deposits ended in success.
Construction began of facilities to tap 4 mm tons of LNG discovered in the East Sea, or Sea of Japan, 58km off the port of Ulsan. "Finally, our dream of becoming an energy-producing country has come true," said President Kim Dae-jung at an inauguration ceremony in Ulsan.

The Donghae-1 gas field is expected to provide about 2.6 % of South Korea's annual gas consumption for 10 years from 2004, saving the country $ 1 bn in imported energy over the period. The reserves are small by global standards. But South Korea's promotion to the ranks of energy-producing countries-- albeit at a junior level -- has been seen to have great symbolic importance, comments the FT. Seoul has long worried about the economic and security risks attached to the country's total dependence on overseas energy sources.
Energy ministry officials said they were hopeful that the breakthrough would lead to further discoveries, with an additional seven or eight sites thought to have potential for commercial exploitation. Japan has been pumping limited amounts of gas from its side of the Sea of Japan since 1984.

Hyundai Heavy Industries and Samsung Engineering and Construction have been chosen to lead a consortium developing the offshore platform, a gas pipeline to shore and a processing plant on land. Both Hyundai Heavy and Hyundai Engineering & Construction have separated from Hyundai Group, their ailing parent group, once the most powerful conglomerate in South Korea.
Analysts said the Iranian contract should help Hyundai Engineering return to profitability this year, following months of painful restructuring that has reduced debt and cut ties with sister companies. The contract involved construction over three years of a huge gas complex operated by Agip Iran, an affiliate of ENI, the Italian energy group.