Hyundai Heavy targets $2.5 bn Saudi escort ships deal

South Korea’s Hyundai Heavy Industries Holdings Co. targets Saudi Arabia’s project for new escort ships worth up to $2.5 billion. The world’s largest shipbuilder is likely to clinch the deal since it joined hands with International Maritime Industries (IMI), a joint venture with the state-run Saudi Aramco and others, for the project, industry sources said.

Hyundai March 6 signed a memorandum of understanding with IMI in Riyadh to jointly win orders for defense projects of the Saudi government, according to shipbuilding industry sources on Friday.

Hyundai established IMI in 2017 in the Middle Eastern country with Aramco; Bahri, Saudi's state-owned shipping company; and Lamprell, a United Arab Emirates-based construction company for energy infrastructure. They are building a large-scale shipyard for very large crude carriers (VLCCs) and a marine engine plant with a target of completion in the next year.

With the MOU, Hyundai and IMI agreed to jointly bid for the Saudi government’s new frigate project expected to be ordered as early as the second half of 2023. The project is to build five 4,000-ton escort ships in an expected deal of $2 billion-$2.5 billion.

SAUDI WANTS TO CREATE JOBS, HELP ECONOMY

Hyundai showcased 10 models of warships including a frigate for Saudi Arabia at the World Defense Show 2022 held on March 6-9 in Riyadh. The HDF-3800SA with 3,800 tons of full load displacement is a warship with significant improvement in anti-aircraft, anti-ship, anti-submarine, and electronic warfare capabilities requested by the government.

Saudi Crown Prince Mohammed bin Salman showed interest in a similar escort ship of South Korea’s Navy when he visited the country in 2019.

Hyundai and IMI are expected to compete with European shipbuilders in France and Spain, but the industry sources in the Middle East predicted the South Korean company to win the order, given its local production base. The government reportedly required shipbuilders to carry out some of the manufacturing processes in the country to create jobs and contributed to the economy.

Hyundai predicted to sign a contract for the project at the end of next year. The company is known to consider building some at Hyundai Heavy Industries Co.‘s shipyard in Ulsan, South Korea and the rest in IMI’s dockyard.

Write to Jung-hwan Hwang at jung@hankyung.com
Jongwoo Cheon edited this article.