The growth of Saudi manufacturing

July 18, 2023

Abdulhadi Fahad Al-Khaldi, president of Olayan Descon Engineering and Industrial Services Company, talks to The Energy Year about the advantages of locally manufactured vapour recovery units (VRUs). A JV between Olayan Saudi Holding Company and Descon Engineering, Olayan Descon is an integrated engineering, manufacturing and industrial solution provider.

What are the origins of Olayan Descon?
Olayan Descon was established more than four decades ago. It’s a successful JV between Olayan Holding – a traditional Saudi business conglomerate that has recently celebrated 75 years in the country – and Descon Engineering, a Pakistani conglomerate with a track record of 45-plus years and deep technical know-how.
We are a Saudi Aramco approved static and process equipment manufacturer and one-stop engineering contractors specialised in turnarounds, shutdowns and asset maintenance with extensive experience and skills to deliver greenfield and brownfield EPC projects.

How would you describe Olayan Descon’s competitive advantages?
Our aim is to be a one-stop solution provider for the oil and gas and industrial sectors. Our main competitive advantages are downstream specialisation and turnkey solutions for energy, petrochemicals and oil and gas sectors. We specialise in static and process equipment manufacturing, the construction of pipeline and piping; civil, mechanical, structural, electrical and instrumentation activities; and all shutdown- and turnaround-related activities, including hydro-jetting, chemical cleaning, bolt torquing and scaffolding.
The fact that the most challenging packages are awarded to Olayan Descon speaks for itself. Our quality in shutdown and turnaround makes us a well-known name in the downstream sector. Olayan Descon is the preferred vendor in most large industrial complexes and plants and for challenging projects – as proven by the turnaround and shutdown packages just awarded to us by Saudi Aramco’s refining segment. We were awarded several packages comprising the most difficult jobs among all contractors.

What are the main advantages of localising the manufacturing of VRUs?
Under the umbrella of Saudi Aramco, Olayan Descon just started a very strategic co-operation with international technology providers specialised in vapour recovery. These units are designed to remove and recover the unwanted or excess vapours present in crude oil or distillate tanks. These units allow operators to comply with prevailing emission regulations while recovering valuable hydrocarbon gas. There is great market demand for VRUs, and our in-country manufacturing will help downstream operators attain new environmental standards.
Olayan Descon’s agreement with international technology providers allows us to support the kingdom’s Vision 2030 regarding key aspects such as reducing carbon emissions and localising fabrication and manufacturing, as the VRUs will be 100% made in Saudi Arabia.
For this, we have agreed with Saudi Aramco and our partners regarding knowledge and know-how transfer for the Saudi market.

What is Olayan Descon’s growth strategy for the coming years?
In 2023 we are implementing short- and long-term strategies to seize opportunities stemming from the phenomenal growth taking place in Saudi Arabia’s downstream sector. We have a 3+2-years plan that has a target of increasing the current company’s bottom line substantially. We will focus on maintaining the existing business line and adapting and growing our market share in our non-core business lines.
The first step is to grow our manufacturing capabilities and volume with a focus on producing static equipment and first exporting to the GCC markets and then to the rest of the world. Our facilities are capable of exporting pressure vessels, reactors, heat exchangers and skids. Our workshop has the most modern equipment, and we are undergoing a continuous improvement process.

 

Does downstream maintenance operate more through long-term agreements or spot calls?
An increasing number of long-term strategic agreements are coming through the pipeline. We recently signed a corporate procurement agreement with Saudi Aramco for air coolers. In Q1 2023, we signed a long-term contract with SABIC covering the shutdown and turnaround for the coming five years. At the Saudi Aramco Shell Refinery, for instance, we have had a long-term shutdown and turnaround contract for many years.
We normally suggest that other maintenance players and clients follow these kinds of contractual models. Furthermore, as part of Vision 2030, we aim to increase knowledge about the industry as a whole, and we share the knowledge we gather with various clients. We are an open book providing our knowledge from one client to another, which benefits the whole industry.

What are the main advantages of early engagement in the shutdown and turnaround segment?
We have a unique approach where our SMEs provide free consultation and do brainstorming with clients before beginning any operation. Early engagement is an essential part of our strategy for achieving successful shutdowns and turnarounds and for any of our other projects. Normally this engagement allows us to come up with improvements that create a win-win situation where the final cost is reduced, and our operation becomes more efficient.
Early engagement is part of our strategy to be a partner to our clients instead of just a service provider. In this way we can provide safe shutdowns, turnarounds and start-ups.
Moreover, part of the execution strategy is the HSE plan, which always requires zero leaks during a facility start-up. This is something that we achieve every time. We do not compromise on any regulation from the HSE.

How important is it to have a flexible hiring strategy when tackling new projects?
We have a very strategic approach when it comes to our workforce. We do not limit ourselves to a certain figure. On average, we maintain a headcount of 2,000-3,000. However, we remain very flexible and can even double or triple that number quickly when there is a market demand or a certain strategic project. It depends on the business.
We conduct a very thorough qualification process to ensure that when we hire, our new workforce meets our highest standard. In any Olayan Descon shutdown, we draw our workforce from different sources, but you will not be able to differentiate who is permanent or who just recently joined us. One of our top priorities is for everyone to deliver the same quality and commitment in full compliance with the HSE regulations.

When does the company seek a partner to deliver a particular service?
It depends on the client’s strategy. If the client demands to have someone with us, we are open and very transparent. With SABIC, for instance, we have multiple long-term maintenance contracts where we operate independently, and we are successful because of the support of our colleagues and our strategic partners.
At Sadara Chemical Company, we have an ongoing maintenance contract on a standalone basis. We also work together with Worley on a preventive and predictive maintenance services contract under the Sadara Maintenance Alliance Program for the chemical complex.

What should investors know about Saudi Arabia’s ongoing transformations?
When Vision 2030 was announced, we could not imagine how it would be implemented. Now we are reaping the benefits of it. In 2024 the country will lead the change towards sustainability.
The Saudi market is growing faster and faster. We’re having weekly, sometimes daily, announcements for new initiatives. The processes to enter the Saudi market are no longer complicated. I encourage investors to come visit Saudi Arabia and see exactly what’s going on. I can guarantee you that they will change their mind about the market.

Read our latest insights on:

• Saudi Arabia