Global Pipe Company (GPC), which recently commenced commercial production in Jubail, is one of the latest success stories of the Saudi British Economic Offset Programme (SBEOP).

GPC is a joint venture between Erndtebrücker Eisenwerk (EEW) of Germany and a consortium of local Saudi companies including Saudi Steel Pipe Company and Pan Gulf Holding which manufactures large-diameter longitudinal submerged arc-welded (LSAW) pipes for use in the oil and gas, power and water sectors.  The new purpose-built facility covers over 120,000 sq m and houses impressive state-of-the-art equipment including some of the largest pipe forming equipment in the world.  Commercial production started for line pipe earlier this year with the first delivery made on March 11 and will commence soon for structural tubular pipe. Production capacity will be 170,000 tonnes per annum for line pipe and 30,000 tonnes per annum for structural tubular pipe.

The kingdom’s Eastern Province, the centre of its oil and gas industry, remains an attractive area for inward investment and a number of projects have been implemented in the last few years under the Offset Programme.  The Jubail Energy Services Company (Jesco) is a SR2.4 billion ($639 million) seamless pipe manufacturing facility which employs more than 700 staff of which approximately 60 per cent are Saudi nationals. This joint venture between the local Saudi firm Taqa and the Swiss company Durferco, is located at the Royal Commission’s Jubail Industrial City which is reputed to be the largest industrial complex of its kind in the world. 

Another project implemented under the programme has been the Arabian Amines Company, which is also located in Jubail and is a joint venture between the Al Zamil Group and the US Huntsman Corporation. It manufactures ethyleneamines for use in a diverse range of applications from asphalt additives to fabric softeners.

SBEOP YIELDS EXPORTS, JOBS
Across Saudi Arabia, projects under the SBEOP have generated exports in excess of SR10 billion ($2.6 billion) over more than 20 years that the programme has been in operation, says senior executive Tony Smith of the British Offset Office that manages the SBEOP on behalf of the British Government. Smith also said more than 2,300 jobs have been created. To date 15 projects have been implemented under the SBEOP with total capital investment exceeding SR9.5 billion.

The Global Pipe Company factory

“Many more projects are currently being developed or are under consideration,” Smith stated.  The SBEOP attracts inward investment into Saudi Arabia through the creation of joint ventures across a range of industrial sectors. The British Offset Office has offices in London and Riyadh.

The SBEOP allows inward investment from companies from most countries around the world.  British Offset is currently supporting companies from the UK, the US, Canada, France, Germany, Italy, Switzerland and Japan and helping them with their joint venture projects from first concepts through to formal proposals and implementation. 

“Over the years British Offset has built up considerable experience of assisting with the development of joint ventures in Saudi Arabia and its links with key decision-makers in the Saudi Government can help bring early resolution of problems which may emerge during the formation of a joint venture or indeed once it has implemented,” said Smith.

The SBEOP offers many advantages, including help with partner identification, free investment bank advice in the early stages of project development and advice and support in obtaining the necessary Saudi Government approvals. A major benefit offered to the foreign partner of a joint venture is access to non-recourse finance for up to 50 per cent of their equity share. Many projects facilitated through the Offset Programme have taken advantage of this equity loan facility which is designed to reduce financial exposure and enhance business returns.

More information on the Saudi British Economic Offset Programme and the role of British Offset can be found on the website at www.britishoffset.com.