Dubai-based Lamprell group, the Saudi Aramco Development Company, Bahri and Hyundai Heavy Industries (HHI) have entered into an agreement to establish a joint venture to establish, develop and operate a maritime yard for the construction, repair and maintenance of vessels and offshore drilling rigs within the King Salman International Complex in Saudi Arabia.
The yard, which is expected to be partially operational in 2019 and fully operational by 2022, will be the largest in the Middle East Gulf, occupying an area of around 4.3 km2 along the Saudi coast at Ras Al-Khair. Lamprell will operate Zones A and D of the yard, which will offer maintenance, repair and overhaul services for jackup drilling rigs and commercial vessels, and the construction of jackup rigs. HHI will be the technical partner responsible for Zones B and C within the yard, which will carry out maintenance and repair for offshore support vessels, and the building of new commercial ships.
Saudi Aramco has entered into an agreement to purchase at least 20 jackup drilling rigs from the joint venture over a ten year period, as well as offshore support vessels, and for maintenance and repair services for its existing rigs. Furthermore, Bahri has agreed to buy at least 52 commercial vessels, including a significant number of VLCCs, from the joint venture over a 10 year timeframe. It will also carry out maintenance and repair work for its fleet at the new yard.
Saudi Aramco will invest around US$ 350 million in the project and will have a 50.1% shareholding in the yard. Lamprell will invest US$140 million for a 20% stake, while Bahri and HHI will invest US$ 139.3 million and US$70 million, giving them shareholdings of 19.9% and 10% respectively in the joint venture.
The total cost of building the yard will be around US$ 5.2 billion, of which US$ 3.5 billion will be funded through the Government of Saudi Arabia. The balance will be financed by the joint venture partners.
Christopher McDonald, Lamprell chief executive said the deal would allow the company to have access to the most important market in the industry. He added: “The transaction will enable growth in scale beyond Lamprell’s capability as a stand-alone entity and will allow the company to strengthen its competitive position through efficiencies, diversification and broader reach.”