GE, Saudi Aramco to Invest in Forging, Casting Facility

GE Oil & Gas has signed an agreement with Saudi Aramco and Italy’s Cividale SpA to construct the Middle East and North Africa’s first-of-its-kind, high-end forging and casting manufacturing facility to serve the region’s energy and maritime industries.

The companies will invest more than $400 million in the facility, which will be sited at Ras Al-Khair under the Royal Commission of Jubail and Yarbu industrial area. The facility is intended to establish a high-value supply chain that boosts exports and economic competitiveness. Scheduled to start operations in 2020, the facility is expected to create 2,000 permanent, direct jobs in Saudi Arabia once it reaches optimal capacity, and to trigger the growth of Saudi small and medium enterprises, GE said in a June 1 press statement. The production capacity of the plant has yet to be finalized, but is expected to range between 50,000 to 70,000 tons a year, a GE Oil & Gas spokesperson told Rigzone in an email statement.

The memorandum of understanding follows a preliminary partnership between Saudi Aramco and Cividale, a producer in the steel and cast iron sector, to conduct feasibility studies for forging and casting manufacturing services in Saudi Arabia. 

“The feasibility assessment study underlines the strong potential for a world-class manufacturing facility for forging and casting services in the Kingdom,” said Antonio Valduga, president of Cividale, in the press statement. “Developing a full-fledged facility through the joint partnership will position Saudi Arabia as a technology and services hub for specialized equipment and services.”

By building a domestic forging and casting production unit, Saudi and regional customers can achieve “greater operational efficiencies in product procurement, repair and service support,” Rami Qasem, president and CEO of GE Oil & Gas, Middle East, North Africa and Turkey, said in a June 1 press statement.

Being a new greenfield integrated shop, the facility will be able to take advantage of newly-designed state-of-the-art furnaces, production lines automation, and press machines, the GE spokesperson said. Normally, casting and forging facilities cater to a narrow span of products. But the facility is designed to cater to a large span of commodity and engineered products, ranging from 60 tons to as little as a few kilograms, including steel and iron-based materials, the spokesperson said.

Unlike typical casting and forging facilities that manufacture rough machine parts, the facility also will be fit with large precision machine equipment. This will allow customers and original equipment manufacturers to offtake fully machined casted and forged components for their final assembly lines, saving them the investment in precision machining equipment, the spokesperson explained.

The spokesperson said that some casting facilities in the region, as well as a handful of forging plants in the Middle East, exist, targeting very specific segments of the markets and mostly focusing on commodity-type products such as manhole covers, crushing materials or small-size pump and value components. The facilities in the region were built as either casting facilities or forging facilities, but not combined.

Karen Boman has more than 10 years of experience covering the upstream oil and gas sector. Email Karen at kboman@rigzone.com

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