Swiber Holdings Limited announced that its subsidiary, Swiber Offshore Construction, has formed a joint venture with a leading Saudi Arabian company, Rawabi Holding Company Limited.
The official signing ceremony for the JV was held in Singapore with Raymond Goh, Executive Chairman and Group CEO of the Swiber Group, and Abdul Aziz Alturki, Group Chairman of Rawabi Holding, both present to formally ink the agreement.
This JV follows the recent inking of a collaborative MOU1 between the Swiber and Rawabi in August. The two companies were brought together under the auspices of International Enterprise (IE) Singapore.
Under the JV agreement, Swiber Offshore Construction and Rawabi Holding will establish a 50:50 joint venture company, Rawabi Swiber Offshore Construction Company Limited, based in the city of Al-Khobar in Saudi Arabia. The two will jointly cooperate to provide services in the field of offshore construction and bid for Engineering, Procurement, Construction, Installation and Commissioning ("EPCIC") projects in Gulf Cooperation Countries (GCC). The GCC includes countries such as Saudi Arabia, Kuwait, Bahrain, Qatar, United Arab Emirates and Oman.
Said Raymond Goh, Executive Chairman and Group Chief Executive Officer of Swiber, "It is a great honor for Swiber to partner with a premier company such as Rawabi Holding. We firmly believe that this alliance will deliver significant synergies to both partners. For Swiber, this JV is an important strategic move as it allows the Group to establish a tangible presence in the heart of the GCC region, situating us closer to our customers and to where the offshore oil and gas action is."
The GCC region is without doubt a vital market to the Swiber Group. Saudi Arabia is the most important oil producer in the world with by far the greatest production capacity and largest reserves volumes. Based on forecasts, offshore capital expenditure for the Middle East from 2009 to 2010 is estimated to be approximately US $20 billion (Source: Global Regional Summary, Energyfiles Ltd.).
Goh continued, "Apart from giving us a stronger market presence in the GCC, the JV also unites the respective strengths of our two companies, creating a potent alliance to provide existing and future customers with a consolidated source of expertise for turnkey solutions to the offshore oil and gas industry. We believe that there will be substantial business generation potential arising from our joint venture, especially given the sea of offshore opportunities in the GCC."
Swiber Offshore Construction has the capability and capacity to undertake work as an integrated offshore EPCIC contractor with supporting in-house offshore marine capabilities under its Offshore Support Services. Rawabi Holding, having been in operation in Saudi Arabia and the Middle East for the last 30 years, is one of the region's leading suppliers of specialised technical services and products to the oil, gas and petrochemical industries.
In addition, Swiber and Rawabi Holding expect synergies to arise from the strategic partnership which will allow the two parties to combine resources, skill sets and market contacts to enhance revenue and earnings growth by cross-offering products and services between the two organizations.
Abdul Aziz Alturki, Group Chairman of Rawabi Holding, who signed the JV agreement, said, "Rawabi Holding is proud to join hands with Swiber in this business venture. We believe that the alliance gels well with Rawabi Holding's overall strategy to dynamically expand our offshore operations, and we look forward to reaping the fruits of this strategic union in the future."
Osman A. Ibrahim, Group Executive Vice President and Chief Executive Officer of Rawabi Holding, who was also present at the JV signing ceremony, added, "Rawabi Holding is very pleased to conclude this joint venture with Swiber. We believe that our alliance will deliver outstanding results, benefits and value to our customers and other relevant stakeholders."
Commenting on the importance of the Middle East and the GCC to Swiber's growth trajectory, Goh said, "The Middle East and the GCC feature prominently in Swiber's overall expansion strategy as they are one of the largest producers of offshore oil and gas in the world. And with the world's rapidly increasing population and rising appetite for energy, this is a region where capex investment will continue to be pumped in toward offshore activities."
To be noted as well, the Middle East and in particular Saudi Arabia, has a lower cost of oil production as their offshore fields are located mainly in shallower water.
Concluded Goh, "We are optimistic about the growth prospects in the Middle East as every statistic indicate an upward trend on offshore spending. With Rawabi Holding working by our side, we believe that our JV is well-positioned to capture the offshore opportunities in the region."
In the short term, lower oil prices will unlikely have an impact on the capex of offshore O&G activities as oil majors typically lock in capex investments years in advance; and in the longer term, demand for oil is underpinned by rising world population.
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