Italy's Saipem agrees to a Saudi Arabian joint venture

Deal signed with Abdel Hadi Al-Qahtani will create a contracting entity capable of delivering major onshore projects

FILE - In this Sept. 20, 2019 file photo, a guard stands in front of Aramco's oil processing facility after the Sept. 14, 2019, attack on Aramco's oil processing facility in Abqaiq, near Dammam in the Kingdom's Eastern Province. A small instrument that two reports say was found inside drones which targeted the heart of Saudi Arabia's oil industry and those in the arsenal of Yemen's Houthi rebels, matches components recovered in downed Iranian drones in Afghanistan and Iraq. Conflict Armament Research said in a report released on Wednesday, Feb. 19, 2020, that these gyroscopes within the drones have only been found inside those manufactured by Iran. (AP Photo/Amr Nabil, File)
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Italian engineering giant Saipem has signed an agreement with Saudi Arabia's  Abdel Hadi Al-Qahtani Group of Companies to create a joint venture capable of handling large contracts in the onshore oil and gas markets.

The proposed venture will look to combine "Saipem's EPC [engineering, procurement and construction] competencies and skills with AHQ's experience in logistics, construction and supply chain", Saipem  said, adding that the company would be a top-tier contractor.

"A central feature of the partnership is the possibility to operate in compliance with the requirements of the IKTVA [In-Kingdom Total Value Add] programme launched by Saudi Aramco as an integral part of its contracts to achieve 70 per cent localisation of spending by 2021," said Maurizio Coratella, chief operating officer of Saipem's onshore engineering and construction division.

Saipem is a major company in engineering and construction in both the upstream and downstream energy sectors.

The contractor had a project backlog of €19.8 billion (Dh78.8bn) as of September 30, 2019, after securing €13.9bn of new contracts in the first nine months of last year. Earlier this month, Saipem announced an agreement with Gulf Petrochemical Industries Company to undertake a feasibility study for three projects in Bahrain – one of which was a study for a new mega-ammonia plant and another to analyse the quality of gas feedstock from fields discovered off the west coast of the Saudi Arabia in 2018.

AHQ is a trading and contracting group in the kingdom's Eastern Province which has been in business since the 1940s. Alongside construction and machinery-related companies, it also has businesses in involved in agriculture, schools and a travel agency.

On Monday, Aramco announced it has signed 66 agreements worth $21bn as part of its IKTVA programme.