April 17, 2016

The UAE’s first large-diameter, sour service capable welded steel pipe project to start operations in 2018

17 April 2016, Abu Dhabi, UAE – Al Gharbia Pipe Company (“Al Gharbia”), a joint venture between Senaat, one of the largest industrial holding companies in the UAE, and two of Japan’s leading companies in the steel sector; JFE Steel Corporation and Marubeni-Itochu Steel Inc. (“MISI”), broke ground today in  Khalifa Industrial Zone  Abu Dhabi (Kizad). Kizad is owned and managed by Abu Dhabi Ports, the master developer, operator and manager of ten non-oil ports in the Emirate.

Al Gharbia will be the UAE’s first plant capable of manufacturing large-diameter, thick wall, sour service, longitudinally welded steel pipe to service the oil and gas transportation sector, with the infrastructure and construction sectors as secondary markets.

The plant will be built on a 200,000 square metres plot of land in Kizad and is expected to formally launch operations in 2018. Once fully operational, production capacity is set to reach 240,000 tonnes annually, of which around 40 per cent will be exported to neighbouring markets in the GCC and greater Middle East, as well as North and East Africa through Khalifa Port and the excellent road network that the UAE’s infrastructure provides.

Commenting on the new venture, Eng. Aqeel Madhi, Chairman of Al Gharbia Pipe Company, said, “This is a critical milestone in the development of Al Gharbia Pipe Company, and I look forward to the plant becoming fully operational in the near future. Al Gharbia is set to become a worldwide benchmark with regards to the manufacturing of welded pipes, both in terms of technology and quality, as well as production efficiency. The high calibre partnership forged between Senaat, JFE Steel and MISI shall enable Al Gharbia to secure a leading position in the region.”

Captain Mohamed Juma Al Shamisi, CEO of Abu Dhabi Ports, said, “Abu Dhabi Ports is proud to host Al Gharbia’s plant, which will be the first of its kind in the UAE. The manufacturing facility on Kizad’s Modular Path –  connected  to Khalifa Port and Abu Dhabi’s highway network to enable the movement of large loads and structures –  will help demonstrate the efficiency of the industrial zone’s innovative and integrated transportation infrastructure. The integrated multi-module transportation network offered by Khalifa Port and Kizad will support Al Gharbia in serving their existing and potential customers.”

Al Gharbia is the first industrial venture between the UAE and Japan to take place in the UAE, and has been strongly supported by the Abu Dhabi-Japan Business Promotion Initiative of the Japan Cooperation Centre for the Middle East. The initiative supports Japanese companies that invest in projects to strengthen ties between Japan and the UAE. Senaat holds a 51 per cent  stake in Al Gharbia, whilst JFE Steel Corporation and Marubeni-Itochu Steel Inc hold 27 per cent  and 22  per cent respectively.

In August 2015, Al Gharbia awarded its EPC contract to a consortium formed by SMS Group and Larsen & Toubro Limited, who will be responsible for constructing the complete plant on a turn-key basis.

In February 2016, Al Gharbia announced the signing of a loan agreement with a group of Japanese and Emirati banks totalling US$185 million. The Japan Bank for International Cooperation (“JBIC”) committed US$111 million, whilst Sumitomo Mitsui Banking Corporation (“SMBC”), Mizuho Bank (“Mizuho”) and National Bank of Abu Dhabi (“NBAD”) will provide the balance of the funds. SMBC acted as financial advisor on this transaction.

With a majority stake in Al Gharbia, Senaat is committed to growing the industrial sector in Abu Dhabi and supporting the implementation of Abu Dhabi’s 2030 Economic Vision.

Total investment in the Al Gharbia Pipe Company is expected to reach AED1.1 billion.