Hyundai E&C Terminates NEOM Tunnel Contract Amid Saudi Project Restructuring

Hyundai Engineering & Construction said on the 13th that it has terminated the tunnel contract for the NEOM City project in Saudi Arabia. The company noted that it received a contract termination notice from the client, NEOM Company, the day prior, and that the termination was requested as part of the client’s project restructuring.

The project covers a 12.5-kilometer tunnel linking Tabuk and Sharma within NEOM City. Hyundai E&C won the contract in 2022 as part of a consortium with Samsung C&T and Greece’s Archirodon.

Hyundai E&C stated that settlements for the work already performed have been completed and, to date, the company has incurred no financial losses.

For international readers, NEOM City is a large-scale development project in northwestern Saudi Arabia intended to house advanced technology facilities and infrastructure. NEOM Company is the client overseeing the project.

The termination highlights the risks associated with large overseas infrastructure contracts when client priorities change or projects are reorganized, potentially affecting the earnings outlook and order book for Korean builders.

U.S. readers have an interest because Korean construction firms have been active in the Middle East, pursuing opportunities in tech- and energy-focused infrastructure that can intersect with American supply chains and markets. Developments in NEOM can influence global competition for megaprojects and opportunities for collaboration with U.S. partners.