Hyundai Engineering & Construction said a tunnel construction contract in NEOM awarded to a consortium led by the South Korean builder and Samsung C&T has been terminated, according to a regulatory filing.

According to Hyundai E&C, the main reason for the cancellation was “a request for contract termination due to the client’s project restructuring.”

The company said it had received formal notice from NEOM Company confirming cancellation of the contract, which had originally been awarded in June 2022. 

The project covered construction of a 12.5-km underground tunnel section in Saudi Arabia’s Tabuk Province and formed part of transport infrastructure planned beneath “The Line,” NEOM’s flagship linear urban development. 

The tunnel was intended to carry highways, metro services and freight rail systems designed to support mobility within the futuristic city.

The contract was meant to be executed by a consortium comprising Samsung C&T, Hyundai E&C and Greece-based Archirodon. The total project value was estimated at about $1 billion, with Hyundai E&C’s disclosed share amounting to about 723.1 billion won ($500 million equivalent at the time of award). 

Hyundai E&C said settlement for completed work had already been finalised and that no financial loss had so far arisen from the termination. It added that details relating to final settlement amounts and compensation terms could not be disclosed because of contractual confidentiality clauses.

The tunnel contract was among early major international civil works packages awarded under Saudi Arabia’s NEOM programme, a central pillar of the Kingdom’s Vision 2030 diversification strategy. In recent months, however, several contractors and suppliers linked to NEOM have reported delays, scope adjustments and revised timelines as parts of the mega-development undergo prioritisation and budget review.