In a move that should cause long-term worries for shipbuilders in China, South Korea and Japan, the oil-rich state of Saudi Arabia took another step closer to producing its own series of VLCCs
Bahri, the owner of a fleet of 40 VLCCs with an average age of 10 years, has signed a vessel purchase agreement (VPA) with International Maritime Industries (IMI) and a subsequent sub-contract agreement with its long-term partner Hyundai Heavy Industries (HHI) to build a 319,000-dwt VLCC in Saudi Arabia.
The delivery of the first VLCC is expected in October 2021. Other agreements signed will ensure all parties pursue a series of long-term business activities, whether jointly or severally on the basis of a multilateral relationship.
The VPA builds on a memorandum of understanding (MoU) signed between Bahri, IMI, and HHI in June this year. The MoU stipulated that Bahri will issue IMI its first VLCC order before the end of July 2019, with IMI engaging HHI as a sub-contractor to build the VLCC at its world-class facility in Ulsan, South Korea.
Commenting on the agreement, Bahri chief executive Abdullah Aldubaikhi said “Our partnership with IMI and HHI represents a major step forward in the pursuit of our long-term goals, which will eventually translate into key milestones in the country’s transformation into an important regional and global logistics and transportation hub. The collaboration is also aimed at furthering our contribution to developing the Kingdom’s own indigenous shipbuilding industry. We will benefit from the transfer of technology and knowledge to develop, increase, and promote local content and create suitable job opportunities for our citizens in line with the objectives of Saudi Vision 2030.”
On his part, IMI chief executive Fathi K Al-Saleem said “This sub-contract award provides many benefits for IMI, including transferring knowledge from HHI to IMI, a mechanism to grant the permission for the use of intellectual property to IMI, development plans for IMI employees to acquire new skills in shipbuilding and planning, as well as technical assistance. This project will also contribute to the long-term growth of this new industry in Saudi Arabia and will enable IMI to independently build VLCCs in Saudi Arabia to the highest international shipbuilding standards.”
“This project award further strengthens the business relationship between IMI and its shareholders, as well as contributing to developing a localised maritime industry supply chain infrastructure, technical expertise for Saudi nationals, and a track record in shipbuilding,” added Mr Al-Saleem.
IMI, a joint venture between Saudi Aramco, Bahri, Lamprell and HHI, is located at the King Salman Complex for International Maritime Industries and Services in Ras Al-Khair, Saudi Arabia. When complete, the shipyard will be the largest, full-service maritime facility in MENA and will have the capacity to manufacture four newbuild offshore rigs and over 43 newbuild vessels including VLCCs annually, in addition to servicing more than 260 maritime products. Major production operations are expected to commence toward the end of 2020 with the facility reaching full production capacity by 2022.
Bahri was the winner of the Operational Excellence Award at the annual Tanker Shipping & Trade Conference & Awards in London in 2018. Book your place now for the 2019 Tanker Shipping & Trade Conference & Awards.