SAUDI ARABIA: Aramco in $600m support vessels deal

Saudi Aramco has signed long-term contracts totaling more than $600 million for support vessels.

The contracts, signed with three Saudi companies, covers the operation of 20 support vessels for Aramco’s marine activities.

Zamil Operations and Maintenance Company of Al-Khobar; the Hadi H Al-Hammam Establishment of Ras Tanura; and Bakri Navigation Company of Jeddah signed the agreements, under which they will operate anchor handling tugs along with supply and safety standby vessels in support of Saudi Aramco’s operations in the Arabian Gulf.

The contracts mark the largest outsourcing effort so far undertaken by the company’s Marine Department with its marine fleet of harbour and offshore support vessels.

The five-year contracts with two-year extensions call for high levels of Saudisation and stipulate that through the course of the agreements new vessels will be built — most in Saudi Arabia — to fulfill the terms.

“These agreements will boost the local economy,” said Amer A Al-Sulaim, executive director of Saudi Aramco Industrial Services. “We only outsource such activities to the private sector when it is demonstrated that the same quality of service can be provided that we could provide internally, and these companies have demonstrated that.”

Zamil Operations and Maintenance Company has worked with Saudi Aramco for 25 years and already operates 42 support vessels; Bakri Navigation Company, which also operates Red Sea ports, operates more than 30 vessels; and the Hadi Al-Hammam Establishment operates 25 vessels.

Saudi Aramco is working closely with marine contractors and developing training arrangements so that Saudi crews can man the vessels, but the service providers still face challenges due in part to an increasing global demand for harbour vessels and skilled manpower, a statement said.

“The international business situation is making it tougher,” said Zamil A Al-Zamil, president of Zamil Operations and Maintenance Co. “We work very closely with Saudi Aramco, but there is very tough competition for first-class vessels.”

“We eventually expect to reach Saudization levels of 80-90 percent,” said Gassan A K Al-Bakri of Bakri Navigation Co. “The hard part is getting officers and chief engineers. Saudi Aramco opened its training facility in Ras Tanura to us, and that helped a lot. Of course, we are counting on the Saudi cadets to do these jobs, but finding qualified officers is the biggest challenge. It takes years for them to get the experience they need, so we are searching the private sector to find former Saudi Aramco and Vela Marine officers and get them back on board.”

“This is the largest contract for vessels tendered at one time,” said Al-Sulaim. “As our experience grows with the local contractors, so does our confidence in them. They’re not only operating vessels, they’re building them, as well. The ability of the private sector to serve the Kingdom’s needs is growing, and they also will be able to serve the needs of the region and the GCC states. These large contracts are an example of Saudi Aramco Industrial Services’ commitment to the company’s strategic goal of helping develop the local economy.”