The National Shipping Company of Saudi Arabia (Bahri) has signed a shareholder agreement with Hyundai Heavy Industries (HHI), Saudi Aramco and Lamprell to enter into a joint venture (JV) partnership to establish a maritime yard in eastern Saudi Arabia.
The JV represents the outcome of the joint venture agreement (JDA) signed between the abovementioned parties on June 1, 2016.
The complex, to be known as “The King Salman International Complex for Maritime Industries & Services”, is expected to be the largest maritime yard in the Arabian Gulf in terms of production capacity and scale.
Intended for providing engineering, manufacturing and repair services for offshore rigs, commercial and offshore service vessels, the yard is planned to be operational by 2019 and fully operational by 2022. The new facility would have a capacity to manufacture 4 offshore rigs, over 40 vessels including 3 VLCCs, and service over 260 maritime products annually, according to Saudi Aramco.
To encompass approximately 4.3 square kilometers extending along the coast of Ras Al-Khair, the area of the maritime yard would comprise four main production zones.
Under the plan, Bahri would purchase from the JV not less than 75 percent of its commercial vessel requirements over ten years, being a minimum of 52 commercial vessels and maintenance, repair and overhaul (MRO) services for such vessels.
In addition, Saudi Aramco’s parent company, Saudi Arabian Oil Company, would purchase, or procure the purchase, from the JV of a minimum of 20 jackup drilling rigs as well as offshore support vessels and MRO services.
Furthermore, HHI would be the technical partner for Zones B and C, the zones that will construct and undertake MRO services for offshore support vessels and construct commercial vessels.
The fourth party, Lamprell, would be the technical partner for Zones A and D, the zones that will provide MRO services for jackup drilling rigs and commercial vessels and the construction of jackup drilling rigs.
The aggregate cost of constructing the maritime yard is expected to be around USD 5.2 billion, of which approximately USD 3.5 billion will be funded by the Government of the Kingdom of Saudi Arabia.
The remaining cost of up to USD 1.7 billion, relating to the specific requirements of each zone, will be funded by the JV. The JV will see Saudi Aramco invest up to USD 350.7 million, Bahri up to USD 139.3 million, HHI up to USD 70 million and Lamprell up to USD 140 million.
Saudi Industrial Development Fund (SIDF) has agreed in principle to enter into an SAR 3.75 billion (approximately USD 1 billion) debt facility agreement with the JV to fund the establishment, development and operation of the yard.