South Korean contractors risk losing $755 million over unpaid Iraqi refinery work

Four major South Korean builders—Hyundai Engineering & Construction, GS Engineering & Construction, SK ecoplant and Hyundai Engineering—face the possible loss of over 1 trillion won linked to the Karbala Refinery Project in Iraq. The firms have yet to collect 625.4 billion won in outstanding invoices, while SCOP, Iraq’s state oil agency, also threatens to seize 420.2 billion won in performance guarantees. SCOP’s refusal stems from reported defects, incomplete tax paperwork and unpaid operations and maintenance fees, despite the refinery’s handover in December 2023.

Negotiations that began in May were reset after a reshuffle in Iraq’s oil ministry and the detention of a deputy minister, and a September proposal from the Korean side was rejected. Iraq now proposes settling the debt with crude oil, a solution viable only for companies that can store and sell the commodity. Rep. Lee Jae-gang has urged the Korean government to intervene and coordinate support for the affected firms.