Growing demand for offshore support vessels in Saudi Arabia

Saudi Arabia

Sufyan Al Zamil, CEO of the Zamil Offshore Services Company, talks to The Energy Year about the effect of offshore expansion on the demand for OSVs and how the company plans to capitalise on the opportunities presented there. The Zamil Offshore Services Company operates and manages a fleet of 75 OSVs and operates across diversified segments of the offshore business in Saudi Arabia.

How is Saudi Aramco’s offshore expansion affecting the demand for OSVs?
Saudi Aramco is expanding its production capacity through a number of large-scale projects, with a focus on offshore fields. It has been made public that the spending on these offshore construction projects is growing four-fold in the next five years as compared to the previous five years. This presents a major opportunity for all offshore players.
We have seen the number of offshore rigs grow in 2023, which drives an increase in the demand for offshore support vessels. This also coincides with an increase in the offshore construction projects, which again drives a similar increase in the demand for vessels. The two main drivers for offshore-service demand are the rig count and the offshore construction activity, and both of those indicators are pointing up.

How is Zamil Offshore gearing up to capitalise on these opportunities?
At Zamil, we sit in a fortunate position, being one of the only fully integrated offshore services providers in the region. Through our diversified portfolio, we offer marine operations, offshore construction and fabrication, as well as shipbuilding and ship and rig repair activities. Therefore, we are very well positioned to address this expansion in demand, and we have put a bold investment plan in place to allow us to capture a major share of this growing market.
Today, our marine fleet is expanding not only in size, but also in complexity. For example, we are significantly increasing the number of jackup barges in our fleet in line with our strategy of focusing on higher complexity assets.

How is the private sector responding to the growth in demand for shipbuilding and maintenance capacity?
The demand for newly built vessels, as well as a long-term MRO capacity, will grow exponentially. We got involved in ship repair shortly after our inception in the late 1970s and in shipbuilding in 2002, through our facilities in Dammam and Jeddah, in addition to managing the Saudi Aramco ship repair facility at Ras Tanura West Pier.
We have built over 80 vessels in our facilities and we complete over 150 ship-and-rig-repair projects every year.
There are many other local and international players supporting the supply chain of this sector, and although this is still perhaps burgeoning compared to other regions, we believe that the demand will drive the full ecosystem to be further localised and support the existing infrastructure.

Please tell us more about your new joint venture called National Shipbuilding Industries Company.
Recently, we created a JV with International Maritime Industries (IMI) to expand our OSV shipbuilding and MRO capacity through a concession in Ras Al Khair. The joint venture has been named National Shipbuilding Industries Company (NSIC), and we have big plans to cover the national demand for OSV services in the coming years with an eye on offering export services as well. IMI is on the verge of opening its full facility for serving all kinds of other vessels, ranging from large carriers to rigs to commercial vessels, and we are very proud to be a trusted partner of IMI.

What are the updates on the company’s drive to diversify and digitalise its service portfolio?
Being part of Zamil Group, a multinational business conglomerate, diversification sits at the core of our strategy. In addition to being fully integrated into the offshore value chain, we also grew through long-term partnerships. With our joint venture partners, we continue to offer specialised end-to-end services such as diving operations with our Zamil Mermaid joint venture with Mermaid Subsea, as well as offshore brownfield EPCI projects with our SBS Oceanics joint venture with McDermott.
Furthermore, alongside our growth, we maintain a high focus on efficiency through adopting various technological initiatives. One example is our fleet digitisation programme, where we are making our vessels “smarter” through live monitoring and condition-based maintenance. This real-time monitoring allows us to guarantee operational and energy efficiency for our clients.

What are the main challenges for the domestic shipbuilding industry to build higher complexity assets?
Today, I could say that we are building vessels with decent complexity in Saudi Arabia. For example, we built multiple, complex 69-metre diving support vessels in our Dammam facility. However, with higher-complexity assets, you always need a strong ecosystem. A good example of that is jackup barges. It’s not easy to build them. We do a lot of refurbishing and retrofitting for barges. However, to build it from the beginning, we need supporting industries. Even in international shipyards, for example, they manufacture the legs and associated structures in specialised, high-precision machining centres, and then install them at the yards.
One of the problems shipbuilders face in Saudi Arabia is that we don’t have such a developed supply chain to back up shipbuilding activities, as it happens in other markets. There are small workshops that perform minor works, but nothing on a large scale. However, this is an area in which Saudi Arabia is quickly improving. Going back to the example of jackup barges, IMI is now going to build jackup drilling rigs at Ras Al Khair and we hope to see that localise some of the associated value chain, such as the legs manufacturing.

Why is the development of the marine industry a key aspect of Vision 2030?
We are at the epicentre of global oil exports and the marine industry is an essential link for this value chain to run smoothly. The marine industry is indispensable in Saudi Arabia’s future. We have major sea borders from the east and west. Encouraged by Saudi Aramco’s world class requirements and support, plus the localisation of technology, we are becoming a very mature marine industry in terms of oil and gas support. We are also making headways in naval shipbuilding and MRO which is supported by the localisation framework that was put in place by the government. We all need to continue the drive towards localising technology and focusing on high skills training.
This situation has set the basis for us to diversify our shipbuilding business. Zamil has built vessels for the Royal Saudi Naval Forces, most recently the high-speed aluminium interceptors. We sent 50 engineers and technicians to train in France, as we aim to localise aluminium shipbuilding capabilities. We also built four surveillance vessels for the Kuwaiti Coast Guard after winning a contract competing against tens of foreign companies, showcasing Saudi’s ability to be competitive internationally. Lastly, we also added composites shipbuilding to our portfolio to serve the defence and commercial sectors.

What are Zamil Group’s goals for 2023 and its role within the In-Kingdom Total Value Add (IKTVA) programme?
Nation-building has been one of the main pillars behind Zamil Group’s strategy since it courageously decided to invest in the manufacturing sector in the early 1970s. We at Zamil Offshore are also fully focused on this goal. We have been pioneers in localising the marine and offshore services and will continue to drive this through our growth initiatives. Our commitment to IKTVA has been steadfast, and we grew our score over the past couple of years to reach 50% most recently.
We are dedicated to monitoring and further growing this score through our long-term partnership with Saudi Aramco. Zamil Offshore planned local content development from the very beginning, with a clear path of training requirements. We have Saudi port captains, general operation managers, vessel captains, technicians and more.

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