Aramco and Hyundai to build US $5.2bn Saudi shipyard
Saudi Aramco has announced it will build the region's largest shipyard in a US $5.2 billion joint venture with South Korea's Hyundai Heavy Industries and others.
The shipyard will be constructed on the kingdom's Arabian Gulf coast and will have the capacity to produce four offshore rigs and 40 vessels, including three super tankers per year, the state-owned oil giant said in a statement.
With Dubai Drydocks and Oman Drydocks both also pursuing new build orders, it is unlikely that the new shipyard will see that level of demand until at least the next decade.
Located in the new industrial port city of Ras al-Khair, the yard will also provide maintenance services for rigs and vessels and this will likely form the backbone of demand in its initial years.
Lamprell, a UAE-based provider of services to the energy industry, and Bahri, have also signed on to the venture, although the statement did not illustrate the nature of their involvement.
"The integrated maritime yard will be the largest in the region in terms of production capacity and scale," Saudi Aramco said. "Major production operations are expected to commence in 2019, with full capacity reached by 2022.”
In a separate statement, Lamprell PLC said the yard will cost an estimated $5.2 billion to build, of which roughly $3.5 billion will come from the Saudi government, with the remaining US $1.7-billion to come from the joint investors.
The deal has yet to be approved by the shareholders of all companies involved.
The deal is backed by the government of Saudi Arabia which has launched a programme to diversify its industrial base after its revenues were badly hit by a 50 percent fall in world oil prices since 2014.
Around five percent of Saudi Aramco is to be floated on the stock market next year to help form the world's largest state investment fund.