PowerPoint Presentation Aramco: Public The next slides contain forward-looking statements regarding...

Saudi Aramco: Public

2017Other OpportunitiesWorkshop


Table of content

•Introduction

•Welding Systems and Consumables Manufacturing

•Diesel Generators Manufacturing

•Personal Protective Equipment Manufacturing


The next slides contain forward-looking statements regarding future events based on current expectations,

estimates, forecasts, and projections. The data is subject to updating, revision, further verification and

amendment without notice. No reliance may be placed for any purpose on the information or opinions

contained in this presentation or any other document or statement, or on the completeness, accuracy or

fairness of such information or opinions therein. No representation or warranty, express or implied, is made

or given by or on behalf of Saudi Aramco or its employees, or any other person as to the accuracy or

completeness or fairness of the information or opinions contained in this presentation and no responsibility

or liability is accepted by any of them for such information or opinions or for any errors, omissions,

misstatements, negligent or otherwise, or for any communication written or otherwise, contained or

referred to in this presentation.

Disclaimer


Table of content

•Introduction





Several opportunities emerge for SMEs across the welding products and services value chain

Additional opportunities

Support products and services

• Potential for SMEs to offer support services and products such as testing, certification, personal protective

equipment and welding gases such as Argon

Manufacturing opportunities

Components Finished Products

• Potential to establish manufacturing facilities for

welding components, such as power sources and

welding cable

• Potential to establish assembly facilities for welding

machinery and plants for manufacturing welding

consumables such as welding electrodes, rods, wires

and fluxes

Source: Saudi Aramco analysis


Arc welding is the most commonly used technique in the Kingdom and has the most potential for localization

Sub-technologiesDescription

Resistance welding •Spot welding

•Flash welding

•Resistance butt welding

•Seam welding

•Heat generated by the electrical resistance of materials

Solid state •Forge welding

•Cold welding•Friction welding

•Diffusion welding

•Ultrasonic welding

•Produces coalescence, for which metals joined retain their original properties without brazing fillers

Gas welding •Oxyacetylene welding

•Oxyhydrogen welding•Pressure gas welding

•Welding flame caused by a reaction of fuel gas & oxygen, can be applied with or without pressure and application of filler materials

•Thermite welding

•Electron beam welding

• Laser welding•Other technologies applicable are laser, electron beam heating, exothermic, and other fusion welding processes

Other

Arc welding •Uses electric power to create an arc between electrode and base material•Most widely used in Oil and Gas and other industrial sectors

•Shielded metal arc

•Gas metal arc, Gas tungsten arc welding

•Submerged arc

Fo

cu

s


Welding types


Three key sectors are expected to drive the demand for welding equipment and consumables within KSA

Description Development in KSA

•Welding of steel and steel alloys used in

buildings and other structures supporting

transportation and infrastructure

development

•Construction expected to grow 3%

annually in KSA, driving demand for

welding materials

•Welding technologies used during the

construction of ships and vessels include

Shielded Metal-Arc (SMAW), Submerged-

Arc (SAW) and Flux Core-Arc (FCAW)

•Maritime yard in Ras Al-Khair expected to

drive significant demand over the next 5

years

•Use of welding in the manufacturing and

maintenance of equipment, in both plants

and midstream (e.g. pipelines and storage)

•Base demand from Saudi Aramco and

other industrial entities

Construction & infrastructure

Shipbuilding

Oil and Gas & chemicals


Welding activity drivers


The scope for localization includes three sets of opportunities: welding machinery and consumable products

Welding Machinery Welding

consumablesSupport products

and services

Scope of localization



GCC welding market is expected to reach US$ 545 Million by 2022, growing 3% annually

GCC welding machinery market size

261 268 275 282 290 297

218 223 229 235 241 248

3%

2022

545

20212020

517 531

2019

504

2017

491479

2018

KSARest of GCCUS$ millions

KSA welding

machinery

market ~55% of

the overall GCC

market demand

Source: Technavio report; Icon, Saudi Aramco analysis

Welding Machinery


Value chain gaps translate into opportunities that can be localized within KSA

Welding machinery value chain opportunities

Opportunities

1. Limited, since most of the welding equipment designs are standard and done at global technology centers

2. Manufacture raw materials such as iron and steel, copper, aluminum to meet the specifications needed for welding components

3. Potential to develop manufacturing facilities for inverters, welding cables, welding torches and other welding machinery components

4. Establish facilities for final assembly of welding machinery

5. Provide maintenance and repair services including:

-Repairs

-Spares

Raw materials Welding componentsTechnology development & design

After-sales services

Final assembly

Source: Manufacturers. Saudi Aramco analysis

Focus

Welding Machinery


GCC welding consumables market is expected to reach US$532 Million by 2022, growing at a 4% annually

GCC welding consumables size evolution

208 204 215 228 242

250 245 259 274290

532

2020

474

2019

502449

4%

20222021

458

2018

KSARest of GCC

KSA welding

electrodes market

composes ~45%of GCC market size

US$ millions

Source: Technavio report; Icon, Saudi Aramco analysis

Welding Consumables


The gaps provide multiple opportunities to support welding consumables localization

Welding consumables value chain opportunities

Opportunities

1. Opportunity to manufacture metals such as iron, steel, copper, aluminum, brass and bronze and coatings materials to welding consumables specifications

2. Limited players manufacturing consumables locally and current production meets <30% of KSA Demand. Opportunity to set up new manufacturing facilities for producing welding consumables:

– Manual welding electrode

– Flux Coated wires for Arc Welding (FCAW)

– Rods for Gas Tungsten Arc Welding (GTAW)

– Wires for Submerged Arc Welding (SAW)

Consumables manufacturingRaw materials

Focus

Source: Manufacturers, Saudi Aramco analysis

Welding Consumables


Opportunities exists for SMEs to manufacture products and provide services needed for welding operations

Support products and services localization opportunities

•Safety related products

– Personal protection equipment such as helmets, goggles, gloves

– Insulated blankets

•Other accessories

– Consumables pre-heater

– Wire feeders

– Workstations

Products

•Argon is commonly used in Arc Welding processes, since it is inert in high temperatures

•KSA annually imports US$ 12.7 million of Argon

•Argon is produced by fractional distillation of air in a cryogenic air separation unit

•Argon production is a potential localization opportunity for the Kingdom

Gases

• Testing and inspection

– Liquid penetrant inspection

– Acoustics

– Radiographic

– Mass particle

– Metallurgical analysis

•Certification

– Welder qualification training and testing

– Product certification

•Other services

– Consulting – welding process design and evaluation

Services


Support products and services


KSA companies involved in Oil and Gas, and other industrial activities are current consumers of welding1

Oil and Gas and Refining Chemicals and Utilities

EPC and Maritime Construction

1. Does not represent future demand or opportunitiesSource: Manufacturers, Saudi Aramco analysis


Table of content

•Introduction





Diesel generators manufacturing represents an attractive opportunity in KSA

Additional SME opportunities

Components manufacturing

• SMEs for manufacturing of components (such as engine blocks, crankshaft, pistons, valves etc. for diesel

engines)


Sub-assembly Final assembly

• Potential to set-up facilities for assembly of diesel

engines, alternators and heat exchange units

• Potential to develop assembly facilities in

collaboration with large global players to increase

domestic diesel generator assembly capabilities



Diesel generators are segmented by level of power output, which typically correlates with size and weight

Diesel generators product segmentation

Product type (by power output)

Small (<375KVA) Medium (375-1,000KVA) Large (>1,000KVA)

Typical application • Standby generators for residence/small business

• Prime generators for low consumption professional devices

• Prime generators for mobile equipment

• Prime generators for equipment requiring heavy power

• Standby generators to provide grid back-up for offices and equipment

Length • 75 – 300 cm • 300 – 450 cm • >450 cm

Weight • 80 – 3,500 kg • 3,500 – 7,500 kg • >7,500 kg

Indicative price range (in US$)

• 3,500 – 45,000 • 30,000 – 120,000 • 75,000 – 200,000



Diesel generators are consumed across various industries in the Kingdom

Diesel generators demand drivers

Type of product Current consumers1

Construction• Mobile generators for cranes, lifts etc.

• Medium to large for heavy machines

• Small generators for hand tools

Segments

• Small generators for back up power or remote locations • ResidencesResidential

• Small to medium for SMEs

• Medium for hospitals, hotels, IT centers, amusement parks, malls

• Offices• Retail stores• Healthcare centers

Commercial

• Medium to large for heavy duty equipment for heavy drilling, etc.Oil & Gas

Telecommunications • Small generators to power transmission towers

Manufacturing and industrial

• Medium to large generators for peak loads, during shut-downs and maintenance work, back-up power

1. Indicative only, Does not reflect any specific future opportunities Source: Saudi Aramco analysis


The demand for diesel generators in Saudi Arabia is expected to reach ~17,600 units by 2022

KSA diesel generator expected market size evolution

8%

2022

0.5

2018

12.6

0.614.9

17.6

2021

16.2

13.7

11.8

0.5

2017

0.411.7

1.2

10.1

15.2

1.5

0.7

14.0

0.6

10.9 12.8

1.6

1.8

1.41.3

20202019

Small (< 375 KVA)Large (> 1,000 KVA) Medium (375 - 1,000 KVA)

‘000 Units

Small diesel generators are expected to be the largest segment in terms of number of units in demand


The demand for diesel generators in GCC is expected to reach ~32,000 units by 2022

GCC diesel generator expected market size evolution

‘000 Units

32.0

14.4

2021

17.6

29.4

13.2

8%

20222018 20192017

9.6

12.2

2020

13.7

21.3

11.7

11.2

14.9

24.927.0

10.3

12.616.2

22.9

Rest of GCC Saudi Arabia


Value chain gaps translate into opportunities that can be localized within KSA

Value chain opportunities

Input materialsComponents and sub-assembly

Final assemblyInstallation and after-sales services

Design

Opportunities

Limited opportunities 1. Manufacture steel alloys, copper to meet the specifications needed for generator components

2. Potential to develop manufacturing facilities for heat exchangers, alternators and engines components

3. Potential to establish facilities to manufacture diesel engine, alternator and heat exchanger sub-assemblies

4. Establish facilities for final assembly of diesel generators, made to final customer specifications

5. Establish QA/QC testing facilities for generators (either in-house by assembling company or third party service providers)

6. Provide after sales support including

–Maintenance

–Remedial work

–Spares and parts manufacturing

Focus

Source: Saudi Aramco analysis,


KSA companies involved in Oil and Gas, and other industrial activities are current consumers of diesel generators1


EPC and Construction Telecommunications



Table of content

•Introduction





Personal Protective Equipment (PPE) equipment manufacturing represents an attractive opportunity

Additional SME opportunities

Raw materials Testing and after-sales services

• SMEs to manufacture raw materials to

specifications

• SMEs for after-sales services such as testing, certification and

remedial actions


PPE Manufacturing

• Potential to establish facilities to manufacture:

– Hard hat

– Face and eye protection

– Fall protection systems

– Protective clothing materials and fire resistant clothing



Personal protective equipment can be broadly classified into six different categories

Personal protective equipment types

Protective clothingKey items: Fire resistant clothing

Hand protectionKey items: Fabric/ butyl gloves

Protective footwearKey items: Toe guards, safety

shoes

Hand, eye, hearing and face protection

Key items: Goggles, hard hat, face shields, ear plugs

Fall protectionKey items: Fall arrest systems,

belts, harnesses

Respiratory protectionKey items: Respirators



The demand for PPE equipment in KSA is expected to grow at 7% annually to reach ~US$ 480 million by 2022

KSA PPE expected market size evolution

136 146 156 167 178 191

205 219 234 250 268 286

7% 477

2021

446

2018

390417

20202019

365341

2017 2022

Oil and Gas Non Oil and Gas

US$ millions

Source: Frost and Sullivan, Transparency, Saudi Aramco analysis


The demand for PPE equipment in GCC is expected to reach ~US$ 610 million by 2022

GCC PPE expected market size evolution

US$ millions

341 365 390 417 446 477

96 103 110118

126135

2019

535468

2018

500437

2017 20222021

612572

7%

2020

Saudi ArabiaRest of GCC

KSA market demand is expected to be ~70% overall GCC demand for PPEs

Source: Frost and Sullivan, Transparency, Saudi Aramco analysis


Manufacturing of PPEs represent attractive localization opportunities

PPE materials and manufacturing localization

PPE type Example PPE materials PPE manufacturing process

•Outer shell made of light weight materials:–Polyethylene (HDPE) - SABIC–ABS - SABIC–Polycarbonate - SABIC

•Compounding to add color, modify properties etc.• Injection or blow molding

Hardhat

•Made of materials that offer impact, heat & chemical resistance, optical quality–Polycarbonate - SABIC

•Compounding to add color, modify properties etc.• Injection or blow molding

Face protection

Eye protection

•Made of materials that offer noise resistance–Polyurethane – Juffali (Polyols from SABIC)

•N/AHearing

protection

• Polyamides / Nylon widely used–Key supplier within KSA: Petrochemical

Conversion Company (Jubail)• Treatment and clothing manufacturing

Protective clothing

1. Acrylonitri le Butadiene StyreneSource: 3M, SABIC, Uvex, Saudi Aramco analysis,


The PPE value chain has potential for localization across all the stages

Value chain opportunities

Input materials ManufacturingDesign Sales and distribution

Opportunities

• Limited design

opportunities

1. Input materials such as High Density polyethylene, Polyurethane, etc. are available within KSA. Localization opportunity involves manufacturing them to specifications needed for PPEs

2. Opportunity for SMEs to establish facilities to manufacture:

- Hard hat

- Face and eye protection

- Fall protection systems

- Protective clothing materials and tailor fire resistant clothing to customer specifications

3. Facilities to test and certify PPEs

4. Opportunity for SMEs to provide services such as storage, logistics, distribution and repair services for PPEs

Focus



KSA companies involved in Oil and Gas, and other industrial activities are current consumers of PPE1


EPC Construction



Please direct all inquiries to:

Farah Al Turkestani

Industrial Development & Strategic Supply Department

Saudi Aramco

[email protected]

Office number: +966 13 880-0237

We invite you to engage with the iktva program and grow your business in Saudi Arabia

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