Saudi Aramco Review 2016

Al Khonaini ... optimistic about the future

Al Khonaini ... optimistic about the future

GPC seen thriving on new contracts with Aramco

The company says it has a good reason to look towards the future with a sense of optimism as the management team is currently assessing the possibility of future expansions to cope with a growing level of demand from the Saudi Arabian market

Jubail-based Global Pipe Company (GPC), a specialised manufacturer in the Middle East of thick-walled steel line pipes, is one of the few oil and gas companies to buck the trend by having a full order book for the next two years.

GPC is a joint venture company between German specialised Longitudinal Submerged Arc Welded (LSAW) pipes manufacturer Erndtebrucker Eisenwerk (EEW), Saudi Steel Pipes, Ahmed Hamad Al Khonaini and Pan Gulf Holding.

The company is riding high on having secured a new agreement from Saudi Aramco to supply piping for an extension of Saudi Arabia’s Master Gas System (MGS), according Ahmed Hamad Al Khonaini, the company’s managing director. As per the deal, GPC has contracted to supply piping for 550 km out of 1,000 km of the total length of the project. "The project is expected to begin soon and will keep us busy for around 12 to 14 months," Al Khonaini says.

Given the sheer scale of GPC’s current workload, the company certainly has good reason to look towards the future with a sense of optimism as the management team is currently assessing the possibility of future expansions to cope with a growing level of demand from the Saudi Arabian market. "Having a full order book for the next two years is a very good position to be in, particularly, when you consider the current global economic climate," he says.

New certifications: GPC, established in late 2010 with a total investment in excess of SR660 million ($176 million), has also recently received Sour Service approval from Saudi Aramco for manufacture of specialised line pipes. The approval by Saudi Aramco for supply of Sour Service Material is particularly notable given the fact that GPC is comparatively a new player in the domestic pipe manufacturing sector. Importantly, it also means the company now occupies an exclusive market position shared by only a limited number of global producers.

"Around 12 pipe manufactures worldwide – including GPC - are currently certified by Saudi Aramco for Sour Service Material Longitudinal Welded Pipes and we are diversifying our portfolio by supporting Aramco’s upstream development activities through supply of the well casings used in drilling," says Al Khonaini.

In another feather in its cap, GPC has also received approval for Well Casing for OCTG (Oil Country Tubular Goods) applications from Aramco. It has also embarked on a new venture to supply value-added services to the local market, he says.

Specialised operations: GPC commenced operations from its manufacturing facility in the last quarter of 2012 and, after initial trial production phase, completed its first pipe delivery in March 2013. During 2013, GPC succeeded in gaining approval from the America Petroleum Institute (API) and, on 25th of November 2013, the company’s pipe mill was awarded official supplier status by Saudi Aramco for Non Sour pipes and Structural Tubular.

The sophisticated plant was set up with a view to manufacturing thick-walled steel pipes, targeting mainly the Saudi Arabian and GCC markets, which, until then, had to import these products.

The company annually produces some 200,000 tonnes of pipe, specialising in LSAW pipes with outside diameters ranging from 16 to 62 inches with thickness from 8 to 51 mm line pipes for oil and gas line pipe applications. It also produces 200-inch diameter pipes with a thickness up to 130mm for structural tubular use.

Ties with Saudi Aramco: Reflecting on its continued association with Saudi Aramco, Al Khonaini reveals that GPC recently completed the 150-km piping project for Shedgum Yanbu Gas Pipeline project with Saudi Aramco.

The project was one of the first direct orders it had received from Saudi Aramco in 2014 and involved supply of piping for the 150-km-long gas pipeline in Saudi Arabia. The deal saw GPC produce up to 84,000 tonnes of steel pipes made of API 5L GR. X65, with a diameter of 32 inches (812.8 mm) and wall thickness 26.97-31.75 mm for the 150-km East West Gas pipeline connecting the Shedgum Gas processing plant, he reveals.

Commenting on the impact of lower oil prices, Al Khonaini says that the recent oil price drop did not affect its business with Saudi Aramco. "Saudi Aramco did not cancel, shift or delay any projects. We have observed a strong re-tendering activity, but this is quite normal since the steel price was also going down," he says.

More Stories