MUSCAT -- Nasser bin Khamis al Jashmi, Under-Secretary at the Ministry of Oil and Gas, yesterday presided at the signing ceremony of the shareholders agreement for setting up a $100 million pipe and casing mill in Sohar by Gulf International Pipe Industry (GIPI) company. The ceremony held at Chedi Hotel, was attended by senior government officials and representatives of leading oil and gas companies.
GIPI will establish the GCC region's first and a state-of-the-art (5th generation) 24 inch electrical resistance welded (ERW) pipe and casing mill in the industrial zone of Sohar capable of producing 250,000 tonnes per year. The GIPI partners include Awtad, a local subsidiary of Al Ghaith Holdings based in the UAE, Golden Dunes Investments (GDI) representing local promoters, Gulf Investment Corporation (GIC), POSCO Steel Services and Sales Company, a sales arm for POSCO, the world's 3rd largest steel producer based in Korea, and Arqan Group, a reputable local business entity."
The joint venture will leverage the complementary strengths of different partners in high grade raw material supply, market intelligence, financial expertise and know-how, including world-class technology in pipe, casing and coating. These synergies will enable GIPI to be a leader in the region in supplying quality products to local and regional customers.
The mill is designed to meet the stringent globally recognised certification requirements such as API/ISO and customer specific quality standards. The casing and line pipes to be manufactured by GIPI find applications in high pressure oil and gas wells. The GIPI products will target the regional market where oil and gas drilling activities are gaining momentum. In the Sultanate, nearly 100 rigs will be operational by the end of the year whereas Saudi Arabia will have an additional 140 rigs.
Casings are required to protect the holes of oil rigs and there is a huge demand in the region for high pressure pipes and casings used in the oil and gas industry, Hamdan al Shaqsy, Managing Director and Chief Executive Officer of GIPI, said. In the Sultanate, the entire requirement in this segment is sourced through imports from Japan, Korea and China, he added. Composite pipes are being manufactured in Oman only for use in water services and GIPI is the first company in the Sultanate to manufacture high pressure pipes used in the oil and gas sector, he noted.
Production will begin by the end of 2008 and 80 per cent of the capacity will be supplied to the local market and the remaining 20 per cent to the regional markets, Al Shaqsy said. The GIPI high pressure steel pipe and casing mill will significantly enhance the Sultanate's aspiration for reducing dependency on import of finished products needed to service its strategic oil and gas sectors. Developing this downstream venture in the Sultanate complements similar efforts by the government towards promotion of local industries.
Hisham Abdulrazzaq al Razzuqi, CEO of GIC, said: "We are very pleased to increase our commitment to the expanding Omani economy through this new investment." We believe that the project will enhance employment opportunities and be part of a growing trend to expand the contribution of the manufacturing sector in Omani GDP and to support other complementary ventures."
GIPI earlier signed an MoU with MillTech, a well-known pipe mill supplier from Korea who will be responsible for delivering the pipe mill on an EPC basis scheduled to be commissioned towards the end of 2008. Gulf International Bank (GIB) will support GIPI to raise the needed debt finance with the UK-based company Mclellan providing independent consultancy for the lenders. Trowers & Hamlins are legal advisers for the project whilst HMR is environmental consultants.
Awtad was established as the local wing of Al Ghaith Holdings, a highly reputable group based in the UAE. This group is majority owner of Shadeed Steel currently under construction in Sohar which also recently signed an MoU with Jindal of India for a $4 billion venture to extend the Shadeed Steel into production of seamless tubes. GDI was established to represent the founder members who possess a combined total of over 60 years experience in the oil and gas industry. The founders successfully engaged local, regional and international partners of excellent repute to participate in the project with combined strengths and synergies in all aspects of the product value chain.
GIC was established in 1983 and is equally owned by the six member states of the Gulf Co-operation Council. GIC provides a range of financial services that support the development of private enterprise and economic growth in the region. It is one of the most highly capitalised financial institutions in the region. As at end 2006, GIC had total assets exceeding $8.1 billion and shareholders' equity of about $1.9 billion.
POSTEEL was established in 1994 as a subsidiary and sales arm of POSCO which is the world's 3rd largest steel mill which produced 31million tonnes of steel products in 2006. The turnover of POSTEEL in 2006 was $1.45 billion."It has 17 overseas affiliates that are mostly steel processing centers in China and SEA. Arqan, founded by a reputable local business group, brings together tremendous synergy in various attributes of the project to provide the oil and gas sector in Oman with the needed comfort of reliability and timely supply of high quality line pipe and casing as finished products to their doorsteps.
By Ebby Chacko George
© Oman Daily Observer 2007
