The ongoing conflict in the Middle East has led to a nearly 40% decline in plant orders from Korean companies in the region compared to last year. Delays in new project bids and intensified competition from countries like China have prompted the government to enhance support for companies through financial assistance, bid information, and high-level consultations.
On October 20, the Ministry of Trade, Industry and Energy held a meeting with major domestic plant companies, the Korea Trade Insurance Corporation, the Korea Trade-Investment Promotion Agency (KOTRA), and the Korea Plant Industry Association. The meeting aimed to assess changes in the local business environment due to the Middle East conflict and discuss challenges in securing new projects, as well as public-private response strategies.
According to the ministry, from January to September this year, Korean companies secured $25.023 billion in overseas plant orders, a 34.8% decrease from $38.376 billion during the same period last year. However, last year's figures included a $18.7 billion contract for the Dukovany nuclear power plant project in the Czech Republic, which skews the comparison. Excluding this contract, overseas plant orders this year represent a 27.2% increase compared to the same period last year. This figure is also 11.1% higher than the average of $22.6 billion in orders over the past five years for the same period.
Despite the overall decline in orders, the downturn in the Middle East was particularly pronounced. From January to September, plant orders in the Middle East totaled $5.826 billion, down 39.8% from $9.678 billion during the same period last year. The Middle East accounted for 23.3% of total overseas plant orders.
The rate of decline in Middle East orders has gradually decreased, from 91.1% in the first quarter to 72.5% in the second quarter, and 39.8% in the third quarter. This reduction is attributed to the inclusion of large projects, such as a fertilizer plant in Saudi Arabia.
The Middle East has historically been a key market for Korea's overseas plant industry. The ministry noted that overseas plant orders are projected to reach $34.07 billion in 2024, the highest level in nine years since 2015. At that time, orders from the Middle East amounted to $15.52 billion, accounting for about 46% of the total.
While the Middle East remains an active market for large energy and petrochemical plant orders, the geopolitical risks and changes in the international energy market can affect bidding schedules. The ongoing conflict in the region has already caused delays in major project timelines, necessitating adjustments to Korean companies' bidding strategies.
Changes in the regional order structure have also emerged. From January to September, orders from the Americas reached $11.248 billion, a 189.2% increase compared to the same period last year, making it the largest market, accounting for 45.0% of total orders. Orders from Asia also rose to $5.544 billion, a 16.2% increase, while orders from Africa increased by 105.6% to $1.992 billion.
In terms of equipment sectors, orders for offshore plants surged to $5.086 billion, a 694.7% increase compared to the same period last year. The equipment sector also saw a 94.0% increase, totaling $6.013 billion. Notable projects contributing to these figures include an $2.88 billion floating liquefied natural gas (FLNG) facility in the U.S. and a $1.56 billion FLNG project in Mozambique. Conversely, orders in the power and desalination sectors fell by 89.2% to $2.966 billion, while the oil and gas sector saw a 40.1% decline to $1.008 billion.
During the meeting, the government discussed support measures to address delays in bidding and the expansion of competitors in response to the prolonged conflict in the Middle East. The Korea Trade Insurance Corporation, KOTRA, and the Plant Industry Association plan to assist companies in securing new orders through financial support, establishing networks with local bidders, and providing business information.
The ministry announced that it will begin releasing quarterly statistics on overseas plant orders globally, including the Middle East. By analyzing order performance by region and equipment sector, the ministry aims to assist companies in developing their overseas expansion strategies.
Baek Jun-hyung, Director of the Ministry of Trade, Industry and Energy's Trade Cooperation Bureau, stated, "The government has implemented various policies to activate plant orders for our companies and has supported project bids during high-level exchanges. We will continue to strengthen comprehensive support to ensure our companies can secure more bidding opportunities."
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.