As far as relationships go, the newly-announced joint venture between Dubai-based steel fabricator Fabtech and National Oilwell Varco (NOV) will be a lasting one according to Fabtech’s chairman, Dr. Harry Moraes.
“We were engaged earlier now we are married and we are not going to divorce,” he quipped.
Under the 60/40 JV with NOV holding the majority stake, the new company now known as NOV Fabtech will combine Fabtech’s manufacturing expertise operating out of its portside facility in Jebel Ali and NOV’s engineering knowhow and reach in the MENA region. Fabtech will provide financial support such as intercompany discounts, manpower, expertise and equipment.
The first two projects for the new company will be to manufacture two 1,500hp drilling rigs for KDC with the contract valued at US$40 million.
“Financially we are pretty sound, the biggest advantage we have is that we are beside the port so transportation is easy, 100% of what we produce here are for other countries, we hardly do anything for the local market so everything goes out. Access and documentation is easy and it’s a tax-free country, we have very good support from Jebel Ali port this makes us more economical, said Moraes.
Oil and gas companies are major customers for Fabtech products, between 37% – 40% of Fabtech’s work is for onshore projects for the industry.
NOV and Fabtech are no strangers to each other as they have worked on a number of projects in the past.
“NOV’s relationship with Fabtech started back in 2002 and since then we did 20 or more rigs plus more than 30 offshore derricks here and a lot of other accessories for rigs and based on that we decided to continue that relationship and even grow it with Fabtech because they supported us since day one. It’s one of the reasons why we are so successful in the Middle East,” said Elie Chehade, NOV Engineering and Production Manager in the MENA.
“NOV does the engineering design and has all the expertise from the last 200 years but the local branch in Dubai does not have any manufacturing capabilities, nor resources like Fabtech does and that’s why it’s an added value to be in the joint venture,” he added.
With this JV, Moraes is buoyant about the future of manufacturing products for the regional oil and gas industry as he predicts a constant flow of projects to replace aging and legacy equipment will come online.
“Every Gulf country which is producing oil is increasing production. Most of the rigs were built in the late 70s and early 80s, the life of a land rig is about 25 to 30 years and so from the 80s to 2002, hardly any rigs were built,” he said.
He added: “There were about 3,640 rigs built until the 80s and hardly any rigs were built from then till 2002, now all these rigs have to be replaced all over the world. The old rigs were not economical. The requirement for new rigs will continue at least for the next 15 years. The number of rig manufacturers who manufacture the whole rig numbered around 69 earlier , this has now come down to less than 30 in the whole world so even if they doubled or were four times their capacity they would take 15 years to complete their backlog.”
Chehade is optimistic too and said that many of NOV’s customers return every year to upgrade and replace their rigs with bigger and heavier rigs.
NOV Fabtech is scheduled to move into a new 40,000sqm facility in Jebel Ali and start operating soon after at the end of the month.
