UPDATE 1-Italy's Saipem, Korea's Hyundai win Qatar deal
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DUBAI, Oct 11 (Reuters) - A unit of Industries Qatar IQCD.QA has awarded two international firms a contract to build a new fertiliser plant in Qatar despite the industry being hit hard by the global downturn.
A sharp fall in Saudi Arabian Fertilisers Co 2020.SE (Safco) third-quarter net profit painted a gloomy outlook for the sector, after it said on Saturday lower global prices, new capacity in the region and a decline in demand from the U.S. affected earnings. [ID:nLA471445]
But despite the downturn, more international firms are competing for deals in the world's largest exporter of liquefied natural gas.
A consortium of Italy's Saipem (SPMI.MI) and South Korea's Hyundai Engineering and Construction 000720 have won the contract to build the plant, Qatar Fertiliser Co said in a statement on the bourse website on Sunday.
The QAFCO-6 project costs are estimated at $610 million, it said.
"The contract covers the supply of licences, engineering, procurement, construction and start-up of a complete granulated urea production plant with a capacity of 3,850 tonnes per day and associated utilities and off-site units at the Qafco Complex in Mesaieed Industrial City," it said.
The project is due to be completed in 35 months.
Saudi Basic Industries Corp (2010.SE) (SABIC), which holds a 42 percent stake in Safco, is expected to record a drop in third-quarter profit of 58.7 percent, according to the average of four analyst estimates in a Reuters survey earlier this month. [ID:nL4477255]
Third-quarter earnings for Industries Qatar are expected to fall by a similar amount, the survey showed. [ID:nL4509710]
In September Credit Suisse revised its price targets on Safco and Industries Qatar and said it expected fertiliser demand to improve strongly in 2010, which would tighten markets and result in a return of pricing power. [ID:nBNG497480]
Shares of Industries Qatar IQCD.QA were off 0.1 percent at 0808 GMT while Safco was 1.3 percent lower.
(Reporting by Jason Benham; Editing by John Irish and Bill Tarrant)
