^ A desalination and power plant in operation.

Article By Adeel Hassan
___

Valve types with higher demand in Saudi Arabia 
Butterfly, plug and choke valves are more in demand across KSA. (Source: Rystad Energy Research on Saudi Aramco). The demand for butterfly valves in the GCC (the Gulf Cooperation Council, comprising Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain, and Oman) is estimated to reach 111,000 units by 2022, with KSA making up 37,400 units. Plug valve demand in GCC is estimated to reach 26,300 units by 2022, with KSA making up 11,400 units. Choke valve demand in GCC is estimated to reach 5,800 units by 2022, with KSA making up 2,500 units.

The Saudi Government has presented the Saudi Vision 2030 and the National Transformation Plan 2020, which will facilitate the growth and diversification of the Saudi economy. Part of the plan is also to keep investing in its oil and gas sector. The Saudi government aims to become the second-largest exporter of refined oil products in the world by 2025 and has opened the sector for private investments.
The Public Investment Fund (PIF), the “Saudi Sovereign Fund”, is the motor driving the execution of Saudi Vision 2030. PIF’s investments include Saudi Aramco and mega-giants like SoftBank. 

As for the oil and gas sector, Saudi Aramco is the main driver. The world’s largest O&G-company has chosen to forward integrate by acquiring 70 per cent of SABIC (the world’s largest petrochemical conglomerate) for USD 69 billion in 2019. This acquisition serves the dual purpose of providing liquidity to the PIF and boosting Saudi Aramco’s downstream and international portfolio.

Diggers at work
Diggers at work in sand field, Jeddah, Saudi Arabia.

Saudi Aramco oil rig
Saudi Aramco oil rig.

Positive impact
In December 2019, Saudi Aramco floated the world’s largest IPO, divesting its 1.5 per cent stake at USD 25.1 billion with Saudi Aramco’s Market Capitalization valued at USD 1.7 trillion. The IPO proceeds thus generated the additional cash flow for sustaining the Kingdom’s oil and gas and related industries.

Saudi Aramco has revealed that it will more than double the number of projects being managed by the firm from 200 to 418 projects by December 2022. As such, the financial measures taken by PIF and Saudi Aramco will have “positive impact” on sustained growth of oil and gas as well as other (related) sectors.


With growing developments in Saudi Arabia’s refinery infrastructure as well as petrochemical, power, utilities, mining, and infrastructure sectors, the demand for valves is anticipated to increase at a robust pace during 2020-2030.

The increasing participation of global petro giants and EPC-conglomerates is certainly going to beef-up the demand for valves, related products and services across Saudi Arabia. Furthermore, massive investments in Saudi Arabia for capacity additions at existing end-user facilities coupled with the launch of new projects are expected to further boost the Saudi Arabia valves market through 2020-2030.

Some of the significant players engaged in Saudi valves market are listed below.

Key manufacturers
  • AVK Gulf
  • General Electric
  • Crane Co.
  • Emerson Electric Co.
  • Flowserve Corporation
  • IVM Saudi
  • Pan Gulf Valve Manufacturing
  • Saudi Valve Manufacturing
  • Forum Technologies
  • Saudi Mechanical Industries
  • KSB

Key suppliers/distributors:

  • Al Najim Saudi Int.
  • BITCO
  • SAECO
  • Saudi FAL
  • United Business Systems Co.
  • Saudi Pipes Systems
  • Gulf Valves CO.
  • Kubota
Essential buyers – end-users
(industry-by-industry)

i) Oil & Gas

  • Saudi Aramco
  • Saudi Electric Co.
  • Schlumberger
  • Sinopec
  • Sino-hydro
  • National Industrial Gases Company
  • Saudi Arabian Texaco Inc.

ii) Mining

  • Saudi Arabian Mining Co. (Ma’aden)

iii) Petrochemicals

  • SABIC and its JVs
  • Petro Rabigh
  • Sadara
  • Sipchem

iv) Water and wastewater treatment

  • NWC
  • SWCC
  • SWPC
  • MEWA Ministry of Environment, Water and Agriculture
  • Marafiq

v) Infrastructure

  • Royal Commission for Jubail & Yanbu
  • Saudi Housing Ministry
  • MODON
  • Saudi Pan Kingdom
  • Al-Manar Arabian Co
  • Al Ayuni Investment
  • Al Harbi Cont
  • Al Rashid Trading and Cont
  • Nesma Trading & Cont
  • Consolidated Contracting Co.

Local approach

Some of the leading players operating in the Saudi market, i.e., Emerson, Cameron, Flowserve, Pentair and the like, have shown increased enthusiasm to expand their operations across the board.
The above expansion partly has been triggered by Saudi Aramco, the largest buyer and end-user of valves and allied products.

The company prefers suppliers that are manufacturing their products in Saudi Arabia by utilizing the local sources. The IKTVA (In-Kingdom Total Value Add) program is designed to support and feed this goal. The stated intent of this program is to localize 70 per cent of the company’s supply chain’s content by 2021 while raising energy-related exports to 30 per cent. By doing so, the company aims to create thousands of jobs for young Saudis. Aramco also stated that having the inventory rooted in the local marketplace greatly increases reliability and results in added efficiency. (Source: Dr. Mohamed Al-Shammari, VP, Saudi Aramco). The IKTVA program features a scoring mechanism based on the spending record of suppliers across the local market and is a key component of “Aramco’s procurement award system”.

Best-in-class infrastructure

Aspiring players, looking to set-up manufacturing facilities, are granted low-cost, long-term “Industrial Financing” by the Saudi Industrial Development Fund (SIDF) duly followed by the commercial banks.
In line with Saudi Vision 2030 and Saudi Aramco’s IKTVA program, Siemens delivered its first (of five) gas turbines built in Saudi Arabia in 2016. The turbine was produced at the Siemens Dammam Energy Hub, Saudi Arabia’s first gas turbine manufacturing facility and the largest in the Middle East. The Ras Al-Khair Maritime Project, King Salman Energy Park, PlasChem, Jizan Economic City, KAEC, and other industrial parks dotted across Saudi Arabia are examples of great efforts to provide best-in-class infrastructure to attract investment and stimulate localization.
Local presence required
Demand for rapid Saudization, the diminishing supply of expatriate workers, and rising costs of work visa maintenance are genuine issues faced by leading valve players working in Saudi Arabia. Training and coaching of production/supply chain staff is an area of absolute necessity for all market players to retain value-adding employees.
As the Saudi valves market is moving forward to reach its USD 5 billion potential by 2024, manufacturers with a significant local presence will have a definite edge over importers and distributors.

Localization is the key to attract megabuyers like Saudi Aramco, SABIC, Saudi Govt Projects, EPC Contractors, SWCC, or Ma’aden.

Winners shall be those who succeed towards achieving sizeable market share. They will be able to do this by developing a clear understanding of Saudi end-users, installing experienced teams, product differentiation and market segmentation, superior service and QC-standards, implementing economies of scale, achieving cost and process optimization and devising a rational localization plan, setting up local manufacturing to stimulate the national and local economy.  
*Post scriptum:

The recent downturn in oil prices along with the Coronavirus pandemic has slowed down the Saudi market in general. A rebound is expected to start in 3Q 2020, with the demand for valves in non-oil & gas expected to take the lead.

Strategic alliances

The global valves market was valued at USD 69.7 billion in 2018 and is forecasted to grow at a CAGR of 7 per cent from 2019 to 2027. (Source: Transparent Market Research Group, 2019). The everincreasing worldwide regulations for “stringent workplace safety” to manage industrial processes has increased the global demand for valves. Increased industrialization has led to stringent regulations for industries such as chemicals, oil & gas, water desalination, pharmaceutical, and others. Several regulating authorities in different regions are beginning to adhere to stricter standards. Fugitive emissions is a major area where valves play a vital role. All these factors also come into play in the Saudi Arabian market.
Due to the critical role of valves in process optimization, vendors are currently focusing on introducing efficient valves with increased pressure control capacities. It is encouraging to note that various multinational valves manufacturers are adopting strategic alliances, joint venture partnerships and acquisition strategies to proficiently compete in the regional markets.

About the author

Adeel Hasan is Production Engineer at Pan Gulf Valves in the Kingdom of Saudi Arabia. The company manufactures a range of isolation, control, highperformance and safety valves for a wide range of industries. Adeel, a manufacturing & operations specialist, has hands-on expertise of the valve sector in KSA. He can be reached at adeelhasan43@gmail.com

Adeel Hasan

Previous articleEquate receives a global award of merit
Next articleValves for Abrasive Process Flow Control
Valve World Publisher
Valve World Publisher