The other partners are UAE fabricatorLamprell, the National Shipping Company of Saudi Arabia (Bahri), and Hyundai Heavy Industries (HHI).
Aramco describes the proposed yard as “the anchor project” within theKing Salman International Complex for Maritime Industries and Services at Ras Al-Khair, near the Jubail Industrial City.
One of the goals of the JV is to localize resources of Aramco’s supply chain related to offshore drilling and shipping activities. This, Aramco says, should lead to optimized cost, reduced response times, and improved “agility” for the company and its affiliates.
The 4.3-sq km (1.66-sq mi) yard will be the largest in the region in terms of production capacity and scale, allowing Aramco and its supply chain companies to satisfy their manufacturing, maintenance, repair, and overhaul requirements for offshore oil and gas rigs, offshore support vessels, and commercial vessels, including VLCCs.
It will be able to fabricate four offshore rigs concurrently, and accommodate more than 40 vessels and service over 260 maritime products annually.
Full-scale production operations should get under way in 2019 with the facility reaching its full production capacity by 2022.
This initiative will also contribute toward localizing expertise related to the maritime industry and job creation in the Kingdom.
According toLamprell, the JV will likely subcontract some of the rig component fabrication work to Lamprell’s yards in the UAE yards during the facility’s construction phase.
Other benefits to Lamprell include the opportunity to pre-qualify with Aramco to bid from its existing UAE facilities for non-rig Saudi work underAramco’s long-term agreement and general bid slate programs.
The new yard will comprise four main production zones, A-D, with Lamprell serving as technical partner for Zones A and D, where the specialty will be maintenance, repair and overhaul (MRO) services for jackup drilling rigs and commercial vessels, and the construction of jackups.
HHI will be technical partner for Zones B and C, which will focus on MRO services for offshore support vessels and construction of commercial vessels.
Aramco’s parent company Saudi Arabian Oil Co. will enter into a master offtake agreement with the JV under which it will agree to purchase, or procure the purchase, of a minimum of 20 jackups (equating to two rigs per year over 10 years, based on prevailing and competitive market prices), as well as offshore support vessels and MRO services for jackups and offshore support vessels operating on Saudi Arabian Oil Co.’s offshore assets, subject to conditions.
Lamprell will invest up to $140 million over the course of the construction of the Maritime Yard from its existing financial resources and future cash flows and will have 20% of the JV’s issued share capital.
Aramco will invest up to $350.7 million, Bahri up to $139.3 million, and HHI up to $70.0 million, with respective interests of 50.1%, 19.9%, and 10%.
The aggregate cost of constructing the Maritime Yard will likely reach $5.2 billion, with Saudi Arabia’s government funding around $3.5 billion to establish, prepare, and construct the site and shared infrastructure.