Gas & Oil Fired, Middle East & Africa

Samsung Engineering sues Saudi Arabia over EPC contract

Samsung Engineering has filed an investor-state dispute settlement suit against Saudi Arabia over an engineering, procurement and construction (EPC) contract for a power and desalination plant.

The arbitration request was filed this week with the World Bank’s International Centre for Settlement of Investment Disputes. 

Samsung’s EPC and testing contract for the 2500 MW gas- and heavy fuel oil-fired Yanbu 3 plant on the Red Sea coast was cancelled in January by state-owned Saudi project developer Saline Water Conversion Corporation (SWCC).

Samsung had won the EPC contract as part of a consortium in 2012, garnering around $1.45bn in orders. But in January SWCC changed its turbine specifications and the two companies said they were unable to agree on new pricing.

Yanbu 3 had been due to come online at the end of 2016, but commissioning has been rescheduled for summer 2018.

At the time of the contract’s cancellation, Samsung said it had received payments of around $830m for the project, which was about 55 per cent completed.

In May, SWCC signed a new deal with China’s Sepco III Electric Power Construction Corp to finish work on the plant, which it then said was around 60 per cent completed.  

In addition to power, the plant is planned to provide 550,000 m3 per day of clean water for eight million residential and commercial customers in the region, which includes the city of Medina.