After several years of discussing the possibility of setting up a new shipyard in Saudi Arabia, the Kingdoms national oil company, Saudi Aramco, has entered into a new adventure. As one of the first NOCs, Aramco is diversifying its operations from upstream and downstream operations to become a major offshore services provider and operator. After decades of the hiring offshore rigs and vessels from third parties, such as Arabian Drilling Company, Aramco has now taken the step not only to own its own jack-up rigs but also to build them at a new shipyard in Ras Al Khair. Aramco has signed a joint-venture (JV) deal with UAE based engineering company Lamprell, Saudi national shipping company Bahri and Asian giant Hyundai Heavy Industries Company. As stated by Saudi officials, the yard will be the anchor project within the King Salman International Complex for Maritime Industries and Services located in Ras Al Khair, near the Jubail Industrial City on the Kingdoms east coast. <\/p>\n
The current plans entail the set-up of the Gulfs largest integrated maritime yard, not only in production capacity and scale, but also in having Saudi Aramco as the main investor. This will present Aramco with the opportunity to design, construct and maintain around 20 jack-ups, while also having the capacity to support the manufacture, maintenance, repair and overhaul of offshore support vessels and commercial vessels. Taking into account that Saudi Arabias main shipping company Bahri is one of the partners, the yard is expected to also service very large crude carriers (VLCCs). <\/p>\n
The original plans were put in place based on the assessment that the JV will offer Saudi Aramco a local provider for its offshore drilling and shipping activities. Cost optimization, reduced response times and higher agility is to be expected. Present capacity is slated to entail the construction of four offshore rigs, around 40 offshore vessels (including three VLCCs) and service of 260 maritime products per year. The first vessels and rigs are expected to be built from 2019 onwards, while full production capacity is projected to be reached in 2022. Related:Canada Pushes For Zero Emission Vehicle Strategy <\/p>\n
Not mentioned in any of the current media reports is the fact that the Ras Al Khair yard, owned and paid for by Aramco, will not only be targeting local Saudi demand. The Ras Al Khair will be competing with existing yards in the GCC (UAE-Bahrain) and Asia. Looking at the current offshore rig market, this is a big gamble. Since the crude oil price crash, a long list of offshore rigs have been stacked while other projects have been put on hold. Commercial incentives for new builds are not easily found. <\/p>\n
But the Ras Al Khair Yard is the new kid on the block, and it has lots of influence behind it. Aramco is the majority stakeholder, able to force other partners in the JV to comply to local demands and specifications. Looking at the offshore market at present, it could even be stated that Aramco will be able to force other yards out of business as it can demand that its co-investors build all new rigs in Saudi Arabia. With a list of 20 new builds already, Aramcos pulling power is not to be ignored. Related:Has Permian Productivity Peaked? <\/p>\n
If Aramco is able to construct and operate the new yard to the highest standards while also supporting the schooling of Saudi offshore rig engineers in the coming years, current rig builders will be in trouble. The localization drive, as linked to Saudis Vision 2030 and Aramcos IKTVA, is a new influence that the market will need to get acquainted too. If Aramco succeeds here, other NOCs are sure to follow suit, leaving the traditional parties without any real options to survive the current onslaught. Offshore engineering companies, ship yards and rig providers will have to reassess their options. The traditional market structure may already be obsolete. <\/p>\n
The $5.2 billion Ras Al Khair Yard project is a prime example of the ongoing changes within Saudi Aramco at present. The industry giant is going through dramatic changes, expanding beyond its NOC status and challenging on the international market. Aramco has entered the market with a bang, and markets should expect more big moves in the build up to what is being marketed as the biggest IPO in history. <\/p>\n
By Cyril Widdershoven for Oilprice.com <\/p>\n
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Aramco Aims To Take Over The Offshore Rig Market - OilPrice.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" After several years of discussing the possibility of setting up a new shipyard in Saudi Arabia, the Kingdoms national oil company, Saudi Aramco, has entered into a new adventure. As one of the first NOCs, Aramco is diversifying its operations from upstream and downstream operations to become a major offshore services provider and operator. Continue reading