Baker Hughes and Saudi Arabia’s Dussur form chemicals JV

The US-listed energy services firm will own 51% of the joint venture as it expands in the kingdom

Baker Hughes will own 51% of the chemicals joint venture while Dussur, owned by the Public Investment Fund, Saudi Aramco and Sabic, will have a 49% stake. Photo: Baker Hughes

New York-listed energy services firm Baker Hughes and Saudi Arabia’s Dussur signed an agreement to form a joint venture that will focus on providing oilfield and industrial chemicals in the kingdom.

Baker Hughes will own 51 per cent of the new chemicals joint venture while Dussur, owned by the Public Investment Fund, Saudi Aramco and Sabic, will have a 49 per cent stake, a statement from Baker Hughes on Wednesday said.

The JV supports Baker Hughes’ efforts to “better serve the chemical market in the region” and includes the company’s existing chemical blend plant in Dammam and manufacturing facility in Jubail, it said. The deal will also help Baker Hughes lower expenses and source raw materials locally.

“This partnership is directly aligned to our broader strategy to invest for growth and leverage our existing strengths while exploring new business models to better serve our customers and the regions in which we operate,” said Maria Borras, executive vice president of oilfield services at Baker Hughes.

The agreement comes as Saudi Arabia, the Arab world’s largest economy, focuses on attracting new investments and diversifying its economy away from oil.

The kingdom recorded a 257 per cent surge in foreign direct investment to $19.3 billion in 2021 as its economy recovered from the coronavirus pandemic.

The number of new foreign investment licences issued last year also jumped more than three times annually to 4,400, with 3,386 of that total issued in the second half of the year, the Ministry of Investment said in its National Investment Strategy report.

Saudi's Vision 2030 economic transformation agenda is also heavily focused on localising manufacturing to create jobs and drive its non-oil economy.

“Expanding the role of oilfield chemicals manufacturing in Saudi Arabia is an important link to Dussur’s mission to support the kingdom’s industrialisation journey and localise technologies that will introduce new value chain capabilities,” said Raed Al-Rayes, chief executive of Dussur.

“We are looking forward to commencing our work with Baker Hughes to contribute to the security of supply in the region and build local capabilities for the jobs of the future.”

The transaction is expected to close in the third quarter of this year and the new JV will continue to operate under the Baker Hughes brand, the statement said.

Baker Hughes formed a 50/50 joint venture called Novel with Saudi Aramco, the world’s largest oil-exporting company, in 2020 to develop non-metallic products for multiple applications in the energy sector.

In October last year, Baker Hughes also started construction of its 300,000-square-metre oilfield services regional hub located at King Salman Energy Park. The facility, which is the largest assembly, maintenance, and overhaul hub for Baker Hughes’ Oilfield Services business in the eastern hemisphere, will have more than 600 employees, including 70 per cent Saudi citizens. It is expected to open in late 2022.