ALKHOBAR: At a time when some Middle Eastern countries are facing financial difficulties, the Kingdom’s star is clearly rising. With tens of billions of dollars of projects awarded, the Saudi construction sector is surging forward. Numerous companies around the world are looking toward the Kingdom to pull them back toward profitability. According to Abdullah Al-Rushaid, chairman, Al-Rushaid Group of Companies, Saudi Arabia is building itself bigger and better, and five years of massive growth lie ahead.
“I want to emphasize that my statement about the upcoming boom is not a prediction. It’s reality,” Al-Rushaid said. “It’s based on contracts that have already been awarded. There is the Saudi Aramco Total refinery that has been awarded. Contractors are already mobilizing to start the construction in Jubail and to start ordering long lead items. ConocoPhillips’ refinery contracts will be awarded in the first part of 2010. These refineries will each cost about $10 billion. These two projects alone will feed local contractors and small businesses. The prime contractors on these projects cannot survive without local fabrication workshops, material suppliers and equipment rental. Perhaps fifty percent of the work will be contracted to local businesses. The companies who take the larger contracts will each have perhaps five to ten subcontractors working for them so these two projects will create a boom for at least four to five years.”
He continued, “Add to this the new aluminum smelter which is a Maaden (Saudi Arabian Mining Co.) job. Also there is the expansion of the Saudi Aramco refineries in Ras Tanura, Yanbu and Rabigh, which will also support local businesses. So we are going to see growth which will keep everybody busy. Riyadh is going to be booming in real estate. There is a construction boom happening now which is really hardly being mentioned. There are many universities being built and even a sports center between Rabigh and Jeddah.”
The building is not physical alone. Al-Rushaid mentioned that the projects planned for every region in the Kingdom have attracted investors looking for a safe haven in a global economy that continues to lack stability.
“All international banks are now focusing on Saudi Arabia. They want to come here and get involved,” he asserted. “We have even been approached by banks who want to be an equity partner in some of the projects we want to do — not only financing, but an equity partner. So this is the place that is for long-term investment. Many contractors who were working in Abu Dhabi, Dubai and Qatar are coming to Saudi Arabia now and setting up facilities. These are mostly in fabrication or contracting and we are seeing the rise of many pre-cast plants and steel fabrication operations. It’s a smart move and even we are setting up fabrication facilities, one for pipe and one for steel structure.”
The Al-Rushaid Group of Companies (www.al-rushaid.com) is an international organization which provides a diverse range of engineering and contracting services, facilities and products, including but not limited to oil and gas, petrochemical, chemical processing and power generation industries. For more than 30 years the Al-Rushaid Group has built its business by bringing modern technology and services to the energy industry in the Kingdom and they now boast more than 32 joint ventures.
“We started out as an agent and then we converted every one of those agencies into joint ventures where we matched every dollar our partner invested in Saudi Arabia. Beyond that, we invested in the facility and land because our international partners are not interested in investing in such things,” Al-Rushaid explained. “Such thinking was ahead of many of the companies in the area. We leased to the joint venture the facilities that we built. It has been a very successful way of doing business. Some of our international partners have been with us for thirty years. We never lost even one partner.”
While the company initially had its business in manufacturing and services, eventually training became important, too. The transformation has had benefits beyond profitability. Most of Al-Rushaid’s joint ventures now enjoy at least 70 percent Saudization because both partners in the ventures are in agreement on the importance of investing in the training of young Saudis.
Recently, Al-Rushaid has been receiving considerable attention with the group’s work on developing and now installing smokeless flares. Invented by a Saudi engineer working for Saudi Aramco, Al-Rushaid Petroleum Investment Company and an American partner were granted a 25-year license by Saudi Aramco to monetize the smokeless flare technology.
“Al-Rushaid does the installation and construction. Our joint venture partner is only involved in the engineering and manufacturing. It’s a 50/50 company we have already installed twenty-eight flares. They are working very smoothly, with no smoke,” the Al-Rushaid chairman said with satisfaction. “We are getting a lot of inquiries about the technology now from other countries in the region. We will be completing our manufacturing facility by the end of the year, so in January we will be ready to export and to install smokeless flares wherever the market requirements are. This is the only smokeless flare that exists in the word that is really an environmentally friendly product. Very soon when you visit Saudi Arabia you will not see flares anymore. You will just see blue flames, clean from any smoke or hydrocarbon product.”
When asked how his group of companies had survived the recent downturn, with a twinkle in his eyes, Al-Rushaid replied, “Very well. There haven’t been that many difficulties in Saudi Arabia compared with elsewhere. Saudi Arabia is the strongest of all the nations in the Middle East and thank God we have a good government that’s managing all our wealth properly and making everyone feel really safe and comfortable.
Smart petroleum producers protect their reservoirs in a downturn and maintain their wells so that when the market improves they are ready to meet demand. Al-Rushaid has followed a similar business strategy and it’s not really our style to advertise everything that we do. Our actions speak for themselves.”
