The Savola sugar plant in Jeddah where British Offset played a major role in its establishment

The Savola sugar plant in Jeddah where British Offset played a major role in its establishment

Saudi-UK offset yields 2,300 jobs

The Saudi British Economic Offset Programme (SBEOP) has facilitated entrepreneurship in key industrial sectors, boosted capital investment and generated employment

February 2014

Sixteen projects have been implemented under the Saudi British Economic Offset Programme (SBEOP) with total capital investment exceeding SR10 billion ($2.6 billion), says the British Offset Office which is managing the programme on behalf of theUK Government.

The projects generated more than 2,300 jobs with exports totalling more than SR10 billion.

“Many more projects are currently being developed or are under consideration,” said the British Offset Office without elaborating on the nature and value of the projects. “Saudi Arabia remains attractive for inward investment and a number of projects have been implemented in the last few years under the Offset Programme,” it added.

One of the projects implemented under the programme is the Jubail Energy Services Company (Jesco), a SR2.4 billion 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 the programme implemented is the Arabian Amines Company, also located in Jubail and which 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. 

The most recent success for the Offset Programme has been the Global Pipe Company, 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 and structural tubular pipe early last year. Production capacity will be 170,000 tonnes per annum for line pipe and 30,000 tonnes per annum for structural tubular pipe.

Jesco’s pipe manufacturing facility

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

Target sectors for British Offset include, but are not limited to, downstream petrochemicals; general engineering related to the oil and gas, water and power sectors; healthcare and medical items;  renewable energy.

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 been implemented.

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.

The Saudi British Economic Offset Programme has been in operation for more than 20 years and it continues to attract inward investment into Saudi Arabia through the creation of joint ventures across a range of industrial sectors.

British Offset played a major role in the establishment of the £100 million ($165.7 million) United Sugar Company Refinery in Jeddah, a joint venture between Tate & Lyle, the Savola Group and other Saudi partners. The sugar refinery, which was the kingdom’s first, has now expanded to become one of the largest of its kind in the world.

The Saudi Polyolefins Company (SPC)’s polypropylene manufacturing plant is a major ($530 million, 450,000 tonnes capacity) joint venture between National Petrochemical Industrialisation Company (NPIC or Tasnee), a Saudi joint stock company, and Basell, the world’s largest polypropylene manufacturer.  Polypropylene is a major thermoplastic which is widely used in packaging, household utensils, children’s toys, carpets, textiles and, increasingly, in the automotive sector.

Synthomer Middle East is a British Offset facilitated joint venture between Dhahran Chemical Industries and the UK’s Synthomer Ltd (formerly the Harlow Chemical Company) which produces polymer dispersants for the Middle East’s paint and adhesives market. Since start-up in 1996, Synthomer Middle East has expanded its market coverage more than threefold, and opened up new export channels and areas of speciality polymer business. Production has now been modernised and extended to increase both manufacturing capacity and bulk storage.

The SA Talke logistics centre is a 100,000 sq m multi-user facility located in the Port of Jubail. It is a joint venture between Talke Logistics Services, the AlJabr Group and Saudi Industrial Services Company.

The facility offers regional customers the storage of bulk and packed petrochemical products together with a range of value-added services for plastics in granulate or powder form.

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