A Saudi firm will partner a Chinese company to set up a plant to manufacture longitudinal submerged arc welded (LSAW) pipe plant and electric resistance welded (ERW) steel pipes in Saudi Arabia.

Abdel Hadi Abdullah Al Qahtani & Sons (AHQ) has teamed up with Panyu Chu Kong Steel Pipe Company Limited (PCKSP) to build the plant with a capital of $106 million. The two companies will each have a 50 per cent share in the venture.

PCKSP is part of a Chinese group which includes Chu Kong Petroleum and Natural Gas Steel Pipe Holdings Limited, the largest longitudinal submerged arc welded pipe manufacturer in China. A PCKSP statement said the group’s total investment commitment in the joint venture will not exceed $53 million. The plant will be set up in two phases to include one LSAW unit and one ERW facility with an annual design capacity of 300,000 tonnes and 200,000 tonnes respectively.

AHQ is principally engaged in the business of supplying materials, equipment and services to Saudi Aramco, Saudi Consolidated Electric Company, Saudi Basic Industries Corporation, Saline Water Conversion Corporation and many other government agencies as well as the private sector. AHQ has a pipe coating factory and is the third largest coating factory in the world.

Commenting on the establishment of the joint venture company, Chen Chang, chairman of the Chinese group, said, 'We are delighted about establishing a JV company with AHQ; the JV company is the first company in the Saudi Aramco region to provide LSAW steel pipes in the local market and therefore effectively fills a large gap in the requirements of the market.'

Synergy for Chinese group

Chang said the establishment of the JV company would not only increase the group’s production capacity and develop, strengthen and expand the market shares of its products in Saudi Arabia and other neighbouring countries, it would also create enormous synergy for the group. He stated that the group could benefit from having lower cost of delivery by setting up production plants in the vicinity of its established customers and potential clients in the location.

Qahtani pipes stored in a Saudi yard

'2011 is a year that global infrastructure projects are picking up their pace of development, and the demand of the international steel pipe market has been on the rise since the end of last year. Leveraging on our experienced management team, research and development capabilities, state-of-the-art technology, well established client base and reputation of excellence, we are well positioned to excel in the steel pipe market to expedite business performance and create value for shareholders,' he added.Chu Kong Petroleum and Natural Gas Steel Pipe Holdings Limited steel pipe products are sold to enterprises in the oil, petrochemicals and natural gas industry for use as pipelines for transmission of oil, petrochemicals, natural gas, city gas and coal slurry, or as casing pipes for oil wells. Its principal production base is located in Panyu, Guangdong Province. On January 23, 2010, it acquired the entire interest in Lessonstart Enterprises Limited from Bournam Profits Limited.

Established in the 1940s, the Abdel Hadi Abdullah Al Qahtani Group has expanded to cover various activities. It first operated as a wholesaler and supplier of food products and materials but has since diversified into supplying a number of industries including petrochemicals and oil and gas. In the 1950s it also took on manufacturing, contracting and services.

The group has invested hugely in pipe corrosion services, manufacturing of spiral weld steel pipes, water treatment chemicals, nails, galvanised wire manufacturing, industrial and medical gases, water bottling , engineering and construction as well as bulk food packaging.

It is also involved in pipe inspection, environmental protection services, exploration of mineral resources and trading in vehicles, machinery and real estate.