GS Engineering and Construction (E and C) and Samsung Engineering have entered a bidding competition once again over a $2.5 billion construction project in the United Arab Emirates (UAE), according to company officials, Tuesday.
In February, GS was selected as the preferred bidder by The Abu Dhabi Oil Refining Company (Takreer), a subsidiary of the Abu Dhabi National Oil Company (ADNOC), for constructing a process offshore crude (POC) plant.
For the past 10 months, GS and Takreer held a series of talks to complete the deal but failed to narrow their differences.
Early this month, the UAE firm decided to organize the bid again, asking construction firms from around the world to submit proposals for the construction of the massive facility that processes heavier offshore crude oil at Ruwais, up to Dec. 13. After reviewing the proposals, Takreer plans to select the preferred bidder early next year.
GS and Samsung, as well construction companies from other countries, are expected to take part in the bid.
"We failed to iron out differences with Takreer over a price and other contract terms," a GS E and C official said. "The UAE firm kept lowering the contract price, citing the falling value of crude oil. In the end, it was harder for us to accept their terms."
The official said GS hasn't decided yet whether to take part in the ongoing bid. "We believe that we are in a better position than our potential rivals. But as we have always said, we will not bid for any contract if we cannot make profits from it."
Samsung said the builder will also bid for the $2.5 billion project, stressing that it will do its best to secure the contract this time.
"We will submit the proposal in accordance with terms outlined by Takreer," a company official said. "However, if the project turns out to be unprofitable, we will not go for it. In the past, we incurred huge losses from undertaking construction projects at prices where we couldn't generate profits. We will not repeat this mistake."
Both builders, which used to earn billions of dollars each year in the Middle East, have not secured a single contract from the region so far this year amid the falling oil prices.
In the first nine months of 2016, GS won construction orders worth 2 trillion won, falling far short of its 2016 target of 5 trillion won. Samsung, which plans to secure overseas contracts worth 6 trillion won this year, has been able to win deals valued only at 3.8 trillion won.
(c) 2016 Korea Times Co. Provided by SyndiGate Media Inc. (Syndigate.info)., source Middle East & North African Newspapers