A joint venture strategy for developing the Saudi economy

Saudi Arabia

Mohamad Haek, CEO of Saudi Drill, talks to The Energy Year about the company’s business philosophy and strategy, its new manufacturing facilities and the advantages of having local capabilities in Saudi Arabia. Saudi Drill is a trading and investment firm focused on equipment and services in the oil, gas and energy sector.

What is the business philosophy behind Saudi Drill’s joint-venture strategy?
Saudi Drill is a 100% Saudi-owned investment firm that partners with international companies in the kingdom. We focus on engineered equipment, and we’re finalising eight different joint ventures with different companies in the construction, manufacturing and services sectors.
All of them are energy oriented. Our role in a joint venture is that of a true partner. We make investments and assist with the market’s dynamics. We work hand in hand with our partners.
To get into the joint-venture market with multinational companies, it is essential to understand the culture of multinational companies. Being fair, honest and hardworking is key, and these values generate a positive reputation that helps us obtain new partners.

What is the status of your manufacturing facilities?
We leased two plots of land in phase 1 of the King Salman Energy Park, where we are developing multiple manufacturing units. The most advanced one is a joint venture with Suhail Industries, a leading vertically integrated manufacturing industrial group. We are starting with three manufacturing facilities that should be commissioned by Q1 2024.

What are the advantages of having in-kingdom manufacturing capabilities?
In-kingdom manufacturing will provide the market with supply security, creating jobs for Saudi and skilled expats, localising technologies and enhancing the local ecosystem. It will also eliminate the logistics hurdles that became so evident during the pandemic, when container costs from China rose to USD 25,000 per shipment and took months to arrive.
We are also ideally positioned to tackle the aftermarket, which includes post-sales, repairs and key services, such as periodic recertification. Providing all these in-kingdom will give us a great competitive advantage and give us a considerable price advantage.

What opportunities have you identified regarding rig services and spare parts manufacturing?
We have a joint venture called JSA Loadmaster that offers rig services. We have around 50 engineers on different offshore and onshore rigs who mainly perform rig certifications, steel fabrication and repairs for rig components and mast services. We have a vast array of rig services that we provide on-site.
We have recently signed an agreement with the International Maritime Industries shipyard that is being built in Ras Al Khair to manufacture masts and legs for offshore rigs at their premises once the shipyard is inaugurated.

What are your activities in logistics and environmental management?
Another one of our joint ventures is called Al-Khaldi Bertling, a logistics company specialising in energy, industrial projects and petrochemical sectors. Our German partner Bertling has its own vessels for moving heavy shipments and equipment.
We have another JV with an environmental management company. Our long-term goal is to perform environmental services. The company already has existing long-term agreements with clients around the country. This requires significant technology and investment.
There is a huge opportunity for growth in the environmental sector, and we are pursuing it. The fundamental added value is the conversion work, in which you take waste and convert it into materials that are useful for society.

How is competition from international companies affecting the overall energy value chain?
In the old days, we enjoyed limited competition, but today the competition is growing by the day. I think there are still many opportunities. Consequently, we have to be more efficient and provide value-added services. We have to offer new technologies, local manufacturing and aftermarket quality.
What I like about our major customers is that they rely heavily on main players for mega-projects. Some neighbouring countries accept working with third- or fourth-tier companies, which makes the market more competitive. We have not seen that in our market, and I don’t see any indication that this will change in the near future.

What do you think about the kingdom’s recent business transformations?
Saudi Arabia has a great legal system that protects investors, and it’s one of the most business friendly and rewarding countries in the world to conduct business. The market has amazing potential. Some of the best-paying customers in the world are in Saudi Arabia.
If you compare the perception of Saudi Arabia today with that of some years back, I think there has been a drastic improvement in how business is conducted due to the massive number of reforms made to enable Vision 2030.

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