Samsung Engineering has left a $3bn project to build a 3.1GW oil-fired power and desalination plant in Saudi Arabia after a changed specification led to a “clash of opinions”, says a report.
The company said it had received a termination notice from the client, the state-owned Saline Water Conversion Corporation, but said the termination would not “hurt its bottom line” because it had already been paid $830m for the 55% of the scheme it had already built, Korean news site Pulse reported on 16 January.
The Samsung-led consortium won the $3bn project on a turnkey basis in 2012. The aim was to combine a power station and a desalination plant for Yanbu Industrial City, on the Red Sea coast about 200km north of Jeddah.
Samsung’s share of the work was worth around $1.5bn. This included the fabrication of fuel supply equipment, the design of auxiliary facilities and the construction of boilers and turbine generators.
The termination notice followed a disagreement over the price that should be charged for changes to the project, in particular to the power station’s turbines.
“A change occurred in the specifications of the turbines to be procured from Alstom and it resulted in the clash of opinions in spite of our efforts to avoid it with approximately 55% of the entire project completed,” Samsung Engineering said, reports the BusinessKorea news site.
The other members of the team were Saudi contractor Al-Toukhi and Shanghai Electric.
The project was due to complete in December 2016, but this date had been revised to August 2018.
Among the equipment put in place are four 4,500 tonne evaporators (pictured) built by Vietnamese engineer Doosan Vina at its factory in Quang Ngai and shipped to Saudi Arabia in one piece.
Image: The Vietnamese evaporator is five storeys high and the size of a football pitch (DAR Engineer)
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