South Korea's government intends to make its firms enter the Saudi market and win contracts to construct $500 billion worth of projects to develop smart and eco-friendly cities in NEOM, in the northwest of the Kingdom.
The Export-Import Bank of Korea has announced the signing of a $6 billion framework deal with Saudi Aramco.
This step could help South Korean companies win contracts in the Kingdom.
The bank also stated that $1 billion out of the $6 billion is set for hydrogen and renewable energy deals.
The three-year deal was signed by Eximbank Chairman Yoon Hee-Sung and Saudi Aramco Chief Financial Officer Ziad Al-Murshed in Seoul.
It comes as part of efforts to create a “second Middle East boom”.
The agreement states that Eximbank can lend up to $6 billion to Saudi Aramco which can be used to pay South Korean companies involved in projects with the global energy firm.
"The deal could give a big boost to South Korean companies in winning contracts in the Middle East," an Eximbank spokesperson said.
The agreement came amid expectations of profitable business opportunities in the Kingdom and the Middle East following the November visit to Seoul by Saudi Crown Prince Mohammed bin Salman.
South Korean companies are seeking to win construction contracts in Saudi Arabia’s $500 billion giga-project to develop eco-friendly and smart cities in Tabuk, northwest Saudi Arabia.
Many Koreans in the 1970s sent home cash by working at construction sites in the Middle East, which was described by officials as the first Middle East boom.
During the visit of the Saudi Crown Prince to Seoul, Aramco announced its most significant investment in South Korea to develop one of the largest steam crackers to maximize the crude to the chemicals value chain.
The 26 billion Saudi riyals ($7 billion) project in South Korea aims to produce petrochemicals from crude oil at S-Oil Corp.
The project, named Shaheen, will mark the first commercial use of Aramco and Lummus technology, a leading licensor of proprietary petrochemicals, to produce chemicals from crude.
The new plant is planned to have the capacity to produce up to 3.2 million tons of petrochemicals annually and include a facility to produce high-value polymers.
The project is expected to be completed by 2026.
The steam cracker is expected to process by-products from crude processing, including naphtha and off-gas, to produce ethylene, a building block petrochemical used to make thousands of everyday items.
