April 19, 2024

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South Korean President Yoon Suk-yeol (right) shakes hands with Saudi Arabia Crown Prince and Prime Minister Mohammed bin Salman before their meeting on Thursday. (Yonhap)

Saudi Arabia's Crown Prince and Prime Minister Mohammed bin Salman arrived in Seoul on Thursday to hold talks with President Yoon Suk-yeol and top business leaders, initiating a slew of agreements worth an estimated $30 billion between the two countries.

The crown prince’s trip to Seoul is his first in three years.

In a closed meeting held earlier in the day, Yoon and the crown prince agreed to develop bilateral relations into a “future-oriented strategic partnership” and establish a “strategic partnership committee” at the leadership level to promote cooperative projects more systemically, according to a written statement released by the presidential office.

Yoon said he hoped to “further expand and develop cooperation” with Saudi Arabia in various sectors, including the crown prince's $500 billion Neom City project, among others. The Neom project aims to create a futuristic smart city in a desert area in the kingdom’s northern Tabuk Province that will be 100 percent run by renewable sources such as solar energy.

In response, the crown prince said he hoped to drastically strengthen cooperation with Korea, citing energy, defense, infrastructure and construction as the key sectors.

On the sidelines of the high-level talks, a total of 26 memorandums of understanding were announced at an investment forum set up by industry ministries of both countries, even though the exact sizes of individual deals were not disclosed.

Later in the day, Saudi's Ashaaq TV reported the kingdom's investment minister as saying deals signed during the meeting were worth $30 billion.

Among them was a $7 billion petrochemicals project by S-Oil. It was the largest direct investment in Korea by Aramco, the largest shareholder of the oil refiner.

The local public-private energy consortium that comprises Korea Electric Power, Korea National Oil, Korea Southern Power, Samsung C&T and Posco signed an agreement with Saudi Arabia's Public Investment Fund to build a $6.5 billion green hydrogen and ammonia plant near Yanbu on Red Sea coast. PIF is the Saudi sovereign wealth fund with over $600 billion in assets.

The 397,000-square-meter plant will produce 1.2 million tons of green hydrogen and ammonia annually from 2029.

Samsung C&T also signed a separate memorandum of understanding with PIF to build staff accommodations to house 10,000 residents for Neom Beta Community, while Hyundai Rotem signed an agreement with Saudi Railway to bid for a railway construction project worth 2.5 trillion won. If successful, Hyundai Rotem will become the first Korean company to build a railway overseas.

Because the Neom project involves building from scratch a 170-kilometer-long linear city called the Line and the floating industrial port city Oxagon, Korean businesses have also been eyeing mega-sized opportunities in the sectors of infrastructure, mobility, robotics and energy systems.

Samsung Electronics Chairman Lee Jae-yong, SK Group Chairman Chey Tae-won, Hyundai Motor Group Executive Chair Chung Euisun and Hanwha Group Vice Chairman Kim Dong-kwan were among the high-profile business leaders who attended a meeting arranged by the prince at a Seoul hotel later in the day. The companies said they could not confirm the schedule for security reasons.

High on the agenda was the potential business partnerships in building facilities and systems inside Neom, according to industry sources.

The crown prince and the Samsung Electronics Chairman were expected to discuss Samsung applying its various information, communication and automation technologies inside Neom. The two have maintained close ties as they met on several occasions and furthered their partnerships in a range of areas including construction, energy, smart city and technology.

Hyundai Motor’s advanced technology in electric vehicles, hydrogen fuel cell cars, robotics and urban air mobility are also likely to have topped the agenda during the meeting, while SK Group is seeking to expand its renewable energy business in Saudi Arabia.

Excavation work for the Line began last month, five years after the project was proposed by the crown prince, despite doubts about the project’s technological and economic viability.

In June, Samsung C&T and Hyundai E&C won a contract for the railway tunnel construction that passes through the Line. While the exact cost remains undisclosed, it is estimated to be worth around $1 billion, making it one of the world's largest transportation and utility infrastructure projects.

By Shin Jin-hye (shinjh@heraldcorp.com) and Kim Da-sol (ddd@heraldcorp.com)