The evolution of Saudi Arabia’s EPC capabilities

Saudi Arabia

Samer A. Samad, president and CEO of Nesma & Partners, talks to The Energy Year about how EPC services have traditionally been delivered in Saudi Arabia’s energy industry and how Saudi Aramco is working to develop in-kingdom EPC capabilities. Nesma & Partners is a contracting company working in various sectors.

How have EPC services been traditionally delivered in Saudi Arabia’s energy industry?
Nesma & Partners was founded in 1981 and has since worked with Saudi Aramco, which has a strategy for developing local EPC service providers in Saudi Arabia. This service has typically only been done by international companies. Previously, the required capabilities, qualifications, expertise and licences were only available abroad.
The oil and gas industry flourished following the model where local companies delivered construction and participated in some of the procurement. At the same time, an international player delivered engineering and the larger and more critical procurement part and oversaw the construction during the execution.

How is Saudi Aramco working to develop in-kingdom EPC capabilities?
In 2022, Saudi Aramco launched the National EPC Champion programme under its Namaat industrial investment strategy, in which local companies collaborate with international companies. We then partnered with Kent PLC and created a JV company called NesmaKent to deliver engineering, procurement and project management services for Saudi Aramco. In this way, we added energy (conventional and unconventional) engineering to our portfolio and support in terms of technology adoption and international procurement.

How will this partnership help Nesma & Partners seize opportunities concerning renewable energies?
The partnership will lead to new capabilities in EPC services in the kingdom related to carbon capture, blue hydrogen and blue ammonia technologies. The JV aims to establish an engineering centre of excellence in the kingdom within five years with a tailored training programme for Saudi nationals that will also rotate Saudi engineers to Kent’s global engineering centres.

How is your project portfolio divided?
35% of our portfolio is Saudi Aramco’s oil and gas projects. We are involved in most of the oil and gas projects in the kingdom. Wherever we can add value, we are involved. We have a major role in the Onshore Maintain Potential Program.
The remaining portion of our portfolio is coming from other clients, such as NEOM, DGDA [Diriyah Gate Development Authority], etc. We also have three projects run by our JV with Almabani. These projects are The Red Sea airport and the construction of two Royal Saudi Air Force airports.

What was the aim behind the company’s recent restructuring?
The roadmap that we have made for the next three years is very intensive. In 2022 we restructured the company to be more sector oriented. We now have three core business lines: industrial oil and gas, infrastructure and buildings. We have a fourth opportunistic business line related to renewable energy, nuclear, water and power generation projects. We are building the necessary competencies and capabilities based on emerging opportunities.
Our partner Kent has major global experience in renewable energy and will add much value to our business. We’ve also signed agreements with EDF Energy and Bouygues to participate in pursuing a nuclear power plant opportunity.
We want to grow assertively and precisely while maintaining and improving our service quality because one bad project can ruin a company’s reputation. In our strategy, we have targeted 2027 to start regional and international expansion, starting with the GCC region and Africa. Whether we would do this through an M&A or joint ventures has yet to be determined.

How is the company approaching training to achieve the required Saudisation standards?
IKTVA [In-Kingdom Total Value Add] scoring depends on many factors, such as human resources, local procurement, social responsibility and the training and development of employees. To help us achieve the right score, we founded the Nesma High Training Institute (NHTI). We also established another NHTI branch in NEOM. We have trained over 8,000 nationals since 2012.
Our training is not only theoretical. It’s also practical training. Regarding safety, we have an excellent programme for certifying and training safety personnel.

What should the international investment community know about Saudi Arabia’s transformation?
It’s happening faster than expected, and now everybody’s jumping on board. It’s important to understand that when you put all these projects on a bar chart and look at the resources required to deliver them, the construction industry will need all the support it can get. Therefore, there are many investment opportunities for foreign companies to come and participate with the local companies to deliver on Vision 2030.

Read our latest insights on:

• Saudi Arabia