The Saudi government is transforming the Kingdom’s industrial sector, with the goal of creating a leading industrial powerhouse and international industrial hub. In order to achieve this vision, Saudi Arabia’s government has launched several diversification initiatives.

At the core of these initiatives is the establishment of special industrial zones and economic cities, which have become catalysts for industrial development and growth.

Spark:a fully integrated industrial ecosystem

One of the dynamic upcoming industrial city is The King Salman Energy Park, known as Spark, which is a mega project designed to position the Kingdom as a global energy hub.

Due to be completed in 2035, the 50-sq km project is being constructed in the Eastern Province over three phases. Spark has announced steady progress on the project’s Phase One with 80 per cent of the work completed which consists of infrastructure, roads, utilities and real estate assets established across 17 sq km.

Located close to Abqaiq between Dammam and Ahsa, Spark will also focus on industrial areas, including upstream, downstream, petrochemicals, power, and water. The new project is expected to generate thousands of direct and indirect jobs and annually add $6 billion to the Kingdom’s gross domestic product (GDP).

With energy giant Aramco as the main anchor tenant in the park, the project will create a global industrial hub for energy-related manufacturing services and is expected to attract some of the world’s biggest and most innovative energy industry names.

Opening new avenues of industrialisation, the company is leading development of the energy-focused economic city in Eastern Province, the heart of the Saudi oil industry.

Only last month, Spark confirmed a new deal for the development of a multimillion-dollar manufacturing site that will produce corrosion protection tapes and oil and gas equipment.

In a statement, the energy city said it has just signed an agreement with oil and gas services provider Mubarak A. AlSuwaiket and Sons Oil & Gas Services Co. (MASO&G).

Spark is being developed to become the leading gateway to the regional energy sector

Through the deal, which represents a SAR40 million ($10.6 million) investment in Spark, MASO&G will set up a factory to produce corrosion protection tapes made of polyisobutylene (PIB) and establish an oil tools equipment manufacturing and service centre.

The factory will be built on a 40,000-sq-m area in Spark. The SAR40 million capital injection will be made over a three-year period.

“Spark is committed to enabling the production of environmentally friendly products and technologies as part of its ESG commitment,” said its President and CEO Saif S Al Qahtani.

Al Qahtani pointed out that through partnerships with tenants who are key players in their industry, Spark elevates the strength of its world-class integrated ecosystem while facilitating investor’s ambitions.

“Ultimately, through the localisation of manufacturing, we contribute towards a more sustainable future for the Kingdom and beyond,” he added.

On the strategic deal, AlSuwaiket said: “Our investment in Spark will provide us with a sustainable ecosystem that enables ease of operations and allows us to contribute towards the localisation of manufacturing in the Kingdom,” said MASO&G’s President, Mubarak Abdullah AlSuwaiket.

SPECIAL STEEL PROJECT

Providing a complete spectrum of solutions

Prior to this deal, South Korea’s steel conglomerate SeAH Group announced that it is setting up a joint venture with Saudi energy giant Aramco to produce special steel pipes in Spark.

SeAH Changwon Integrated Special Steel Corp, the group’s special steel maker, said the joint venture, SeAH Gulf Special Steel Industries (SGSI), will accelerate the expansion of the group in the Middle East, according to The Korea Economic Daily report.

In September of last year, SeAH Changwon agreed on an investment of $230 million to jointly set up a seamless stainless steel pipe production plant with Aramco-owned Saudi Arabian Industrial Investments Company (Dussur), the Saudi Arabian Public Investment Fund and Saudi Basic Industries Corp.

They completed the JV establishment after reporting the integration to six authorities including those in South Korea, Saudi Arabia, the European Union and China, said the report.

The factory will have an annual capacity of 17,000 tonnes. Construction work on the factory will commence in Q4 of this year with commercial operations set to begin in first half of 2025.

277,000 SQ M DRILLING SITE

Earlier, the mega project that is currently under construction announced that Aramco and Horizon Project Company have broken ground on a 277,000 sq m drilling and workover site.

Construction on the site is set to be completed by Q2 2023.

“This is another significant venture by Aramco that will contribute to business continuity. We expect the new drilling and workover facilities to attract other oil field services companies, who have an indispensable role to play within the collaborative setting of an integrated energy ecosystem,” Nasir Al-Naimi, senior vice-president of upstream at Aramco said in a statement.

The new complex will provide infrastructure for 1,200 drilling and workover employees. Aramco and Horizon have already signed a 22-year contract for the project.

“The development strategically advances our role as an anchor tenant at SPARK. As an integrated ecosystem for the energy sector, Spark is being designed to capture the full economic value of demand for energy-related goods and services. Aramco intends to leverage the scale of our drilling activities to meet that demand and ensure continuity of energy supply, thereby cementing our position as a global energy leader and bolstering the Kingdom’s position as a hub for energy services,” Abdulhameed Al-Rushaid, vice-president of drilling and workover at Aramco said.

FDI AT SPARK TO EXCEED $2BN

“We’re excited to announce Aramco’s new drilling and workover head office and industrial hub at Spark. Its establishment will enhance the oil and gas supply chain by utilising Spark’s advanced offerings, such as its logistics hub and dry port, to establish a thriving eco-system,” Al Qahtani, said.

“This can also be a driver for other localisation opportunities across the energy value chain, for example at Spark’s digital and non-metallic hubs. Spark aims to support the industry and attract small and medium enterprises to its state-of-the-art, ready-built facilities and its supply base operated by Oilfields Supply Center (OSC),” he added.

DRONE SYSTEMS AT SPARK

Spark also signed a lease agreement with EnEx to establish a manufacturing facility to produce drone systems at Spark’s digital hub.

The project will also produce power isolators and is another step forward to localise production and digitisation in the kingdom, said Spark in a Twitter message.

EnEx is a private Saudi company acting as an investor and business promotor.

Spark is also the first and only industrial city in the world to achieve silver LEED certification.