The demand for local manufacturing in Saudi Arabia

Saudi Arabia

Raed Alghamdi, general manager of Anabeeb, talks to the Energy Year about regional service providers embracing new technologies and the demand for automation in the domestic maintenance and shutdown segment. Anabeeb is a contracting company in Saudi Arabia, offering more than 50 service items to customers, including planning services for shutdown and maintenance.

As downstream facilities continuously become more technologically complex, how can regional service providers embrace new technologies to add value and cut costs?
It is fundamental to showcase to potential partners that, right now, the country is moving in the direction of localisation. If you want to compete, you have to be local. You have to be present in-country.
We want to localise more specialised services in Saudi Arabia – not just bringing the services, but also manufacturing the specialised equipment. Hopefully, we can achieve this with existing and potential partners in the future. So, in case anything happens in the future, such as war or another pandemic, the market is not impacted by these technologies not being local.

Tell us about your most recent introduction of hot tapping services in the region.
We have achieved this with one of our newest partners, America Trade, for hot tapping and line stopping services. They brought their equipment here and can manufacture the special parts locally, which now enables us to do hot taps in up to 60-inch pipelines, and the equipment is available in our second yard in Jubail II as well.
When suggesting a new solution, it is important to explain to clients that these solutions are local, they are available in-country, a phone call away. It’s not going to take two or three weeks until it arrives here.

What are your most important projects right now?
Everything we do is niche. We don’t do the general services that everybody does. Aside from our day-to-day onsite projects, currently, we’re handling the Petro Rabigh shutdown. They have five plants, and we’re handling two of them with a workforce of more than 3,500, along with the required equipment. Afterwards, we’re going to provide maintenance for the Yansab facility and the Aramco facility in Riyadh.

What is the demand for automation in the domestic maintenance and shutdown segment?
The demand is a bit immature, for now. It’s not 100% there. Clients want it, and we promote it, but they don’t want to pay for it. They will reach a point in the future – and we have to be ready for that – where it will be more difficult to bring people in, and it will be feasible to use automation. We use automation in many ways when we work with heat exchangers. But sometimes, when it gets more complicated, that’s when they look at the price tag.

How have local downstream companies approached maintenance spending in the past years?
It didn’t go back to how it was prior to the Covid-19 pandemic. The appetite to have major shutdowns is not at the level it was before. Big companies, such as refineries or Aramco joint ventures, never had a problem going through thorough maintenance programmes. During the oil price downturn, smaller companies only did the basic required maintenance. So that’s where you see that the appetite is still not there to go back and perform comprehensive shutdowns, longer turnarounds and more projects.

How do you foresee a future expansion and what investments will support it?
In Saudi Arabia, we are the leaders of our segment. But in Abu Dhabi, we don’t have as many services as we have here. We might be adding more parts to the portfolio in the UAE, maybe expanding through an additional workforce or more support equipment, like cranes. This will depend on the number of available opportunities.
We have recently acquired additional equipment. In Q4 2022, we received new compressors from Atlas Copco, we purchased two vacuum containers for catalysts from the US and we also invested in high-pressure pumps for specific cleaning of reactors. These were custom-made for the Sadara Chemical Company. We’ve made some investments this year. Hopefully, we will make some more investments next year as well.

What sets Anabeeb apart from the competition in the pipeline construction segment?
The company originally started with pipeline construction, and then we became specialised in, microtunnelling and horizontal directional drilling. We’re one of the few companies, if not the only company, that has the capacities for microtunnelling, HDD, small-rig and maxi-rig. We can do 6-inch lines and 46-inch lines 500-600 metres underground. We did one of the reroute projects with Saudi Aramco, crossing under the Dhahran-Jubail Expressway, with seven 56-inch lines, each one about 600 metres. We’re one of the best when it comes to Aramco pipelines.

Which are the main drivers behind the growth in demand for pipeline maintenance?
Saudi Aramco is continuously going over their Maintain Potential Program on pipelines. In the past 20-30 years, they used to do maybe 10-15 projects per year, and now they do 200-300 projects per year, increasing/maintaining the production of oil and gas and water as well. We work a lot with the Maintain Potential Program, mostly for smaller lines. We’re also working right now on the Marjan oil and gasfield development, with these major EPC contractors for Aramco projects.

What is your approach to creating long-term sustainable international partnerships?
We have good partnerships with many companies from Europe, the United States and Asia. Our doors are always open to welcoming new technologies and new partnerships, and methods we can use to do things safer, better and faster.
We regularly organise summits where we reunite partners from all parts of the world. We did one on heat exchange at Jubail Industrial City. The most important part is finding the concerned people, be they procurement managers or the end users of a determined technology within a company, and letting them be advocates for their management. This can help us come on board where we can add value.

How can framework contracts for shutdowns improve local contractors’ management of resources?
We are trying to convince clients to adopt a blanket contract approach in Saudi Arabia for their turnarounds. This is how they do shutdowns in Qatar, the UAE and India. Through blanket contracts, you plan for the shutdown contractors to not be bidding each and every time. This gives us a better forecast of resources. The next five years should be guided by a blanket contract that we have just signed.

What were the current market conditions in the final stages of 2022?
Lower oil prices and Covid-19 put all plans on hold. However, we managed to survive throughout these last few years with tough competition, and clients without much budget for maintenance and shutdowns. However, we succeeded in never terminating anyone to reduce costs, and we managed to still invest and do well. People here are treated as family, these are the values that our shareholders instilled in us.
We started thinking again about expansion starting in 2023. We will announce new projects and new contracts very soon. So hopefully, we will have better clarity on whether we will launch projects in Iraq or perhaps expand our existing operations in the UAE, Qatar, Bahrain or Kuwait.

How would you describe Saudi Arabia’s current business environment?
As a nation, we are focusing on developing the country and the youth, and on having sustainable energy for the future. The Public Investment Fund is opening up all sorts of investment opportunities. In terms of energy, we have solar programmes and much more.
Saudi Arabia’s vision is diversifying, showing to the world that there are other options besides just oil and gas here. The country is educating its population, especially the youth, on the fact that there are plenty of sectors with potential, such as tourism. Attracting foreign investors is also opening the door from a cultural point of view and for technical know-how.

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