Responsive diversification for achieving Saudi Vision 2030

Saudi Arabia

Mahmoud Mostafa Gidamy, senior vice-president, and Saad Ali Alessa, chairman of EMKAN Holding Company, talk to The Energy Year about the company’s main activities, how it has diversified its services portfolio and its credentials as a sole-proprietorship establishment exclusively for oil and gas pipeline activities to an entity with multiple business units and a diversity of services and products serving different sectors in the Saudi market.

Please describe EMKAN Holding’s main activities.
Ali ALESSA: EMKAN is a Saudi investment holding company receiving its direction from the ambitious Vision 2030. The company is committed to being a part of building the nation. We have a well-known footprint in engineering services, contracting services, trading, industrial manufacturing, pharmaceutical manufacturing, logistics and other general support services.
The company’s roadmap began in 2016, and by 2020 we transformed each department into a separate entity under EMKAN Holding Company. Today, we own and operate 16 companies encompassing various sectors, including trading, contracting, manufacturing, engineering and services such as logistics and IT. We currently have a workforce exceeding 5,000 employees, and this is just the beginning of our growth trajectory.
Since 2016, our market value has increased from SAR 50 million [USD 13.32 million] to approximately SAR 1.2-1.5 billion [USD 319.68-399.6 million] by 2022. We continuously engage in joint ventures with international partners to explore new business opportunities and work to localise their facilities in the kingdom. These collaborations span across manufacturing, drilling, contracting and activities outside the energy sector, such as medicine.

How has the company diversified its contracting service portfolio?
Mahmoud MOSTAFA GIDAMY: Currently we have several contracting companies. The first is Saad Ali Al Essa Group for Contracting (ALESSA), which was established in 1989 and is the mother company and the starting point of our journey in the oil and gas sector in Saudi Arabia. ALESSA primarily offers services such as pipeline rehabilitation, maintenance, electrical and instrumentation, and some industrial construction work.
Construction Pillars Company (CPC) offers construction project management services for the real estate sector. Incharge Maintenance Company (Incharge) provides general maintenance services, such as repair and maintenance for industrial valves, machining activities, hydro jetting, etc. Our other companies are Petroleum Vision Contracting Company (Petro-V) and the Metal Installation Company (MIC), which are contracting companies.

What are your credentials in the pipeline construction segment?
AA: In 2019 EMKAN acquired its first company. It is called Petroleum Vision Contracting Company (Petro-V), which was established in 1966 (then known as M. A. Al Kawari Contracting) and has more than 50 years’ experience working with Saudi Aramco in pipeline construction.
After the acquisition of this family company, we restructured it and invested in new assets and resources. Aside from construction, Petro-V is now able to provide pipeline and in-plant construction, operation and maintenance. We now have projects under this company exceeding SAR 450 million [USD 119.88 million].

What is EMKAN’s value proposition to deliver turnkey fabrication services?
AA: Our SAMIF factory produces a wide range of customised engineering products, such as structural steel, piping, pressure vessels, boilers, tanks and skids. These products cater to the oil and gas, petrochemical and power generation sectors.
The Metal Installation Company (MIC) is responsible for equipment installation, testing and commissioning and primarily focuses on industrial projects. It functions as the contracting arm of SAMIF. The combination of SAMIF and MIC allows us to undertake turnkey fabrication projects, from engineering design all the way to final delivery.

How can SAMIF serve the upcoming nuclear power plants in Saudi Arabia?
MMG: When we selected our machines, we selected very special types, such as 21-centimetre rolling machines. These can manufacture products for nuclear plants. SAMIF is the only facility that works with 21-centimetre rolling machines in the whole Middle East. Even the technicians from Rosatom, the global leader in nuclear technologies, were impressed when they visited us.

How important is having a stable financial situation in obtaining new contracts?
AA: We have noticed that many well-known contractors face financial issues, which emphasises the importance of having strong financial capabilities in securing and successfully executing major projects.
Our financial strength gives us a significant advantage in the Saudi Arabian business scene. We have the financial stability and resources to support projects effectively, making us a preferred contractor. Additionally, our ability to invest capital strengthens our competitive edge as a potential partner for international companies looking to enter the market.

How would you describe your business model in terms of diversification and growth?
MMG: The name “EMKAN” in Arabic means “we make it possible.” By refusing to limit ourselves and our aspirations, we foster growth. We have no limitations when it comes to exploring new business models, which may seem unconventional in the MENA region. We adapt and change frequently to keep up with the aggressive market dynamics.
As an example, in our first year EMKAN received 10 9COM certificates for SAMIF from Saudi Aramco to provide different kinds of products. We have another five being processed, and we aim to have around 25 9COM vendor certificates soon. We aim to achieve this in a five-year span, while other companies take 25 years to do so.
Our proactive approach ensures that we remain in sync with the market’s speed. Our business strategy is not set in stone; it continuously evolves. We believe in collaboration and embrace the concept of win-win partnerships. In Saudi Arabia there are numerous government projects, but the challenge lies in finding suitable contractors.

How do long-term agreements (LTAs) enhance your capability to provide services across Saudi Arabia?
AA: In ALESSA, we currently handle over 55 contracts, with approximately 15 of them being LTAs that cover the entire kingdom. In some of these LTAs, we are the main contractor.
This gives us security with respect to the demand for our services and enables us to invest in our own infrastructure. These contracts encompass various services for Saudi Aramco for oil and gas facilities in upstream, downstream and midstream operations, including the Onshore Maintain Potential Program.
We have expanded our reach to cover the eastern, western, northern, central and southern regions. Each area is managed by an area manager supported by a dedicated team, offices and facilities. Our operational efficiency enables us to mobilise anywhere in Saudi Arabia within 24 hours.

Where do you identify opportunities for localising manufacturing capabilities?
MMG: The future lies in manufacturing, particularly in non-metallic pipes, wrapping and repair. With this in mind, we have established strong partnerships – including some with renowned companies – and R&D collaborations.
Localisation has become a crucial requirement. Our IKTVA [in-kingdom total value add] score is at 53%, but this is just the beginning of our localisation efforts. As the exclusive agency for CSNRI, we are working on localising their technology for composite wrapping, an exceptional solution for pipeline repair.
Investors often face a unique cultural landscape and require local partners who can provide guidance and support, including meeting Saudisation requirements. We are catching as many opportunities as we can and anticipate phenomenal growth in 2023.

How are you planning to seize opportunities around mega-projects such as NEOM?
AA: Our business diversification has been driven by the ambitious Saudi Vision 2030. EMKAN’s objective is to expand its presence beyond the oil and gas industry in recognition of the growing opportunities in infrastructure development, particularly in urban areas and for new city projects. Saudi Arabia is witnessing numerous mega-projects, such as The Cube in Riyadh and The Line, which both focus on urban development.
To tap into this opportunity, we established a new company in 2022 specifically for real estate contracting. We aim to contribute to the dynamic landscape of Saudi Arabia’s infrastructure development.

How do you envision expanding beyond Saudi Arabia’s borders?
MMG: We recently achieved a significant milestone in our business expansion by securing our first international project in Tunisia for ALESSA. This marks our entry into the international market. Additionally, we have established two branches, one in Egypt and another in India, which allows us to explore opportunities in the Asian market. We are developing plans to expand our presence in various regions.

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