Saudi set for new shipbuilding complex

DUBAI, May 31, 2017 – Saudi Aramco has signed a deal with its partners for the creation of the new King Salman International Complex, co-developer Lamprell announced on Wednesday.

A conditional agreement was signed between the UAE’s Lamprell, Korean shipbuilding company Hyundai Heavy Industries, Saudi shipping company Bahri and Saudi Arabia’s NOC for a joint venture entity to operate the proposed facility.

A total of USD 3.5 billion is set to come from the government, with Aramco investing around USD 351 million for a 50.1% stake in the joint venture. Lamprell will invest up to USD 140 million for a 20% share, while Hyundai will take the remaining shares for around USD 70 million.

For additional financing, the project will be able to use a USD 1-billion credit facility created by the Saudi Industrial Development Fund, if needed.

It was also revealed that over a 10-year period, Aramco had agreed to purchase a minimum of 20 jackup rigs and Bahri a minimum of 52 commercial vessels.

The King Salman International Complex is an anticipated 4.3-square-kilometre shipbuilding and repair complex that will carry an estimated price tag of around USD 5.2 billion. The facility, dubbed the Ras Al Khair minerals industrial city, is located close to 100 kilometres north of Jubail.

It will not only serve clients in the Middle East, but also in the Eastern Mediterranean, the Caspian, offshore India and along East Africa. The facility will be able to perform annual operations on four offshore rigs and more than 40 vessels, including three very large crude carriers.

Construction is expected to start in 2018, with operations beginning as early as 2019 while the facility continues to expand. The four-zoned complex is expected to be fully operational by 2022.

Lamprell is set to be the technical partner for zones A and D, which will build jackup rigs and perform repair and overhaul for jackups and commercial vessels, while Hyundai will be the technical partner for zones B and C, which will construct and perform repair and overhaul for commercial vessels.

The project is one of the key pillars in Saudi Arabia’s Vision 2030 platform, an economic and social reform initiative approved by the Saudi government on April 27, 2016. It involves advancing fiscal growth, initiating education and training reform and upgrading efficiency practices throughout the country’s industry by the year 2030.

Specific goals from 2016 to 2030 for the country include raising female participation in the workforce from 22% to 30%; reducing the unemployment rate from 11% to 7%; growing FDI from 3.8% to the international norm of 5.7% in order to increase public assets from USD 160 billion (SAR 600 billion) to more than USD 187 billion (SAR 700 billion); raising localisation of the oil and gas industry from 40% to 75%; and raising the contribution of SMEs and the private sector to GDP from 20% to 35% and 40% to 65%, respectively.

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