Wednesday, July 5, 2017

Saudi Aramco, Dussur, and Hyundai to set up engine JV

State oil giant Saudi Aramco has announced plans to set up a comprehensive engine and pump business co-operation framework in a joint collaboration with Saudi Arabian Industrial Investments Company (Dussur) and Korea-based Hyundai Heavy Industries (HHI).

As per the deal, the Saudi Aramco JV will set up a factory at Ras Al Khair Economic City in the Eastern Province which will manufacture 2-stroke engines, 4-stroke engines, and marine pumps for vessels and power plants.

The company will also provide sales and after sales services to the customers across the Middle East and North Africa (Mena) region.

The new manufacturing facility will be co-located with the maritime yard at the King Salman International Complex for Maritime Industries and services, where it will develop synergies with several complementary ventures, stated Ziad Murshed, the vice president for new business development at Saudi Aramco after signing the agreement with Rasheed Al Shubaili, the chief executive of Dussur and Kidon Change, the chief executive of engine business at HHI. 

The new JV will manufacture 4-stroke engines under HHI’s HiMSEN brand licensing, serving as a regional production stronghold to support the growing demand for electricity in the Mena region as well as marine applications for very large and small vessels, he added. 

According to him, the company will operate under a MAN-HHI sublicense for the manufacturing and servicing of 2-stroke engines. 

The trio has identified strong economic and strategic levers to the new JV such as the lower costs of production due to the advantaged supply of machine finished steel and iron components for engines and pumps from the casting and forging facility JV in Ras Al Khair, fixed and variable costs synergies related to the integration of 2 & 4 stroke engines in one shop and competitive advantages related to the transportation of such engines from other international sources. 

Also the increasing demand of 4-stroke engines either as complementary or backup power generation systems to support the growing demand for renewable power generation and remotely located new power plants, and the secured demand for engines and pumps in marine applications coming from the maritime yard JV will help in boosting the business, in addition to a number of other internal advantages related to the contribution of each partner to the deal.

Saudi Aramco said the engine and pump JV is expected to generate over 650 direct jobs, as well as indirect jobs through the development of the supply chain. The facility is likely to start commercial operation by the end of 2019, it added.-TradeArabia News Service

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