Saudi Petrochemical and Plant EPC Orders & Risk Report — September 4, 2026

---

1. Changes in Project Order Stages

• SGC E&C adopts Advanced Work Packaging (AWP): Global EPC specialist SGC E&C has officially implemented the "Advanced Work Packaging (AWP)" method, revamping its internal systems to enhance project execution competitiveness. This move is interpreted as an effort to secure a technical edge in global plant bidding wars, including in Saudi Arabia.
• Slowdown in Saudi construction employment growth: According to statistics from the Saudi Contractors Authority, the construction sector employment growth rate for the first quarter of 2026 hit 6%, effectively bringing the high-growth phase of the past two years to a close. This analysis attributes the slowdown to the realignment of giga projects, hinting at potential adjustments in upcoming new order volumes.
• GS E&C goes all out for a turnaround on the Fadhili project: GS E&C’s Plant Business Division is attempting a rebound to recover from first-half operating losses by leveraging the Fadhili project, despite its Saudi local subsidiary falling into complete capital impairment with liabilities exceeding 1.2 trillion won. Overcoming past additional cost burdens from Rabigh 2 to the Yanbu refinery, the company is aiming for stabilization backed by an order backlog worth 1.7 trillion won.

---

2. Domestic Corporate Participation Potential and Financial Support

• Utilizing government Middle East infrastructure support funds: The government is establishing a $6 billion financial support package and dedicated funds to help Korean companies break into the Middle East infrastructure market. This strategic measure aims to secure a competitive edge when bidding for large-scale infrastructure projects, easing the funding burden for domestic builders.
• KOTRA and Infrastructure Cooperation Center trend reports: The Saudi Arabia Infrastructure Cooperation Center is monitoring exchange rate fluctuations and policy shifts through its major project trend report covering late August to early September. Based on this reliable information, domestic firms can establish local partnerships and bidding strategies.
• HanmiGlobal continues to secure PM (Project Management) orders: Following its success in winning PM orders for housing and infrastructure commissioned by the Public Authority for Housing Welfare (PAHW) in Kuwait, HanmiGlobal has secured consecutive wins in Saudi Arabia, signing contracts totaling 47 billion won. This indicates that entry barriers for Korean companies in the design and supervision phases are lowering.

---

3. Early Risk Detection (Contracts / Finance / Politics)

• Delays in commencement and collection risks: Project kickoffs are being delayed due to the realignment of giga projects, bringing wage payment obligations and living expense burdens to the forefront. It is essential to explicitly state cost burdens for waiting periods, early termination, and penalty clauses in contracts.
• Worsening financial soundness of local subsidiaries: When a Saudi local subsidiary falls into complete capital impairment—as seen in the case of GS E&C—any additional losses can deal a direct blow to the headquarters' financial structure. Because past practices of over-bidding and low-bid contracting are currently translating into cost pressures, precise cost verification is required for new orders.
• Drifting of mega-projects like Neom City: Due to liquidity issues at the Public Investment Fund (PIF) of Saudi Arabia and difficulties in attracting external investment, the risk persists that some mega-projects—such as the Neom City "The Line" underground tunnel construction involving the Samsung C&C consortium—could be delayed or suspended.

---

4. Competitor/Rival Trends and Strategies

• Chinese and Italian firms sweep UAE gas plants: The UAE has awarded $8.0 billion worth of gas plant upgrade EPC contracts to Chinese and Italian companies. This demonstrates that Chinese price competitiveness and Italian technical prowess remain formidable in the Middle East, narrowing the foothold of Korean companies in GCC countries outside of Saudi Arabia.
• Saipem kicks off Saudi gas compression package: Italy's Saipem, together with its local partner (Nasser Saeed Al-Hajri and Partners), has commenced EPC work on Saudi Aramco's Uthmaniyah gas compression package. Order strategies utilizing local partnerships continue to be observed among European firms as well.
• Need for differentiated strategies by domestic companies: Creating technological and managerial added value that goes beyond simple construction—such as process management efficiency through SGC E&C's adoption of AWP or HanmiGlobal's strengthened PM capabilities—is emerging as a core strategy to survive price competition against China.