Saudi Aramco, Saudi Arabian Industrial Investments Company (Dussur) and Hyundai Heavy Industries (HHI) have signed a memorandum of understanding (MoU) to collaborate on the manufacture of engines and pumps in Saudi Arabia.
The MoU sets out the comprehensive engine and pump business cooperation framework and forms a joint venture (JV) that will manufacture two-stroke engines, four-stroke engines and marine pumps.
The JV will also be responsible for sales and aftersales services in the Middle East and North Africa (MENA) region.
It will develop four-stroke engines under HHI’s HiMSEN brand licensing in order to support the growing demand in the MENA region, as well as for marine applications for very large and small vessels.
Additionally, the new JV is set to manufacture two-stroke engines under a MAN-HHI sublicense.
The manufacturing facility will be located within the maritime yard in Ras Al-Khair, at the King Salman International Complex for Maritime Industries and services.
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It is expected to commence operations by the end of 2019, as the involved parties are preparing the detailed documentation required to reach a final investment decision.
The initiative is expected to create more than 650 direct jobs along with additional indirect jobs throughout the supply chain.
All the parties have agreed on the strong economic and strategic opportunities of the new JV.
It is expected to lower costs of production due to the consistent supply of machine-finished steel and iron components required to build engines and pumps from the casting and forging facility JV in Ras Al-Khair.
In addition to the supply of raw materials, the JV is expected to benefit from the fixed and variable costs synergies related to the integration of two and four stroke engines, as well as the increasing demand for four-stroke engines in renewable power generation and in marine applications.
Image: Officials of the three companies at the signing ceremony. Photo: © Saudi Arabian Oil Co.