meed-logo

line1 line2 line3
SIGN IN / REGISTER

Aramco and DHL form joint logistics company

8 February 2024

Register for MEED's guest programme 

Supply chains have become a key issue for businesses over the past three years as the global economy emerged from Covid-19 lockdowns and then faced disruptive events such as the grounding of the EverGiven in the Suez Canal and the war in Ukraine.

More recently, Houthi attacks on shipping passing through the Red Sea have forced many vessels to travel around Africa rather than through the Suez Canal. This has delayed deliveries and driven up costs.

These disruptions, together with technological advances such as AI and a growing emphasis on sustainability, are forcing logistics providers and their customers to rethink how their supply chains are managed.

Locally in Saudi Arabia, the supply chain challenge is of particular importance as the kingdom seeks to overhaul its economy with large-scale capital expenditure projects as part of Vision 2030.

Joint venture

Two of the world’s largest players in their respective fields, Saudi Aramco and DHL Supply Chain, are responding to these challenges and aim to revolutionise logistics for the energy, chemical and industrial sectors by joining forces to incorporate a new joint venture company known as Asmo.

Salem Al Huraish, chairman of Asmo, described the new company in a speech at its launch in Khobar on 5 February as “a national champion that will reform the supply chain industry for the energy, chemical and industrial sector in the region.”

The company involves two industry heavyweights combining their expertise. “Aramco is a massive procurement beast, and is very successful. DHL is a logistics company. Everybody does their respective pieces separately,” said Craig Roberts, CEO of Asmo.

“Bringing the two together in a separate entity is something that hasn’t been done before. We believe there are massive efficiencies for the industry from doing this.”

The company, which has been planned for three years, comes at an opportune time for Aramco and DHL, but also for Saudi Arabia and the global logistics sector.

“We are launching a company with an ambitious vision to become a market leader in the Mena region,” said Wail Al Jaafari, Aramco executive vice-president of technical services.

“Asmo can offer world-class end-to-end supply chain solutions, creating value for customers while enhancing the resilience of their supply chain.”

New technologies

As well as changes in Saudi Arabia, the nature of the logistics industry is being transformed by new technologies, notably artificial intelligence (AI).

“We stand at a defining junction of the logistics industry where global trends are dramatically reshaping the landscape,” said Oscar de Bok, CEO of DHL Supply Chain. “The world is grappling with supply chain disruption, rising costs and the urgent goal for sustainability.”

Asmo intends to take a smart approach to revolutionising supply chain logistics. “It’s a lot about being smart,” said De Bok. “We talk a lot about deploying technology, digital marketplaces and warehouse technology … there is a lot of cool stuff being deployed, but it is not always rocket science. Some of it is pretty basic stuff you need to do,” he said.

The journey for Asmo is just beginning. It is a long-term venture that aims to develop a significant presence in the kingdom over the coming years.

“We are in partnership together and at the start of that journey right now,” Roberts added. “We are looking at our supply chains, gaining insights and asking how we get smarter. When we build in new warehouses, the question is, where do you put them? What technology do we deploy? We are in that discovery phase right now.”

One of the critical aspects of Asmo’s strategy involves assessing physical infrastructure needs. “For physical infrastructure, Asmo is assessing its options. We are looking at that right now. Aramco has a number of facilities for itself and its affiliates. We are looking at the best places to put the warehouses,” Roberts said.

Saudi infrastructure

As well as Asmo’s dedicated infrastructure, the Saudi government is also building infrastructure to support the kingdom’s logistics industry. “They’re putting infrastructure in place. They’re making it quite easy for us to do this. I think the support of the government is vital,” he said. 

Once established in the kingdom, Asmo aims to take its operations overseas. This is likely to involve expanding into other GCC markets first and then further afield. Both Aramco and DHL can support this strategy as both companies have significant operations outside Saudi Arabia. DHL is a global logistics player, and Aramco, while primarily being a Saudi company, has operations in many other markets worldwide, including the US.

If Asmo gets it right, the rewards are significant. “The supply chain and logistics market in the Mena region is worth around $100bn. Our goal is to have a major share of this. It is truly a new giant in the making,” said Al Jaafari.

https://image.digitalinsightresearch.in/uploads/NewsArticle/11500762/main.jpeg
Colin Foreman

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • Saudi Arabia evaluates 2GW energy storage bids

    23 October 2024

    National Grid Saudi Arabia, a wholly-owned subsidiary of Saudi Electricity Company (SEC), is evaluating bids for the contract or contracts to supply battery energy storage systems (bess) with a total combined capacity of up to 2,500MW.

    According to a source familiar with the project, the SEC entity solicited bids directly from equipment manufacturers, which include China's Sungrow, Hithium and Huawei Technologies, among others, to supply batteries, which will be installed by an engineering, procurement and construction (EPC) contractor.

    It is understood that SEC has tendered the  EPC package or packages separately.

    MEED previously reported that the planned facilities, each with a capacity of 500MW or roughly 2,000 megawatt-hours, are located in or within the proximity of the following key cities and load centres:

    • Riyadh
    • Qaisumah
    • Dawadmi
    • Al-Jouf
    • Rabigh

    The main applications for the planned bess facilities include load shifting, black start, frequency regulation and voltage support.

    They are envisaged to replace part load operation of existing power plants by charging and discharging electricity according to the system load variations and primary and secondary reserves, among other potential applications.

    In August, National Grid SA awarded the EPC contracts for three energy storage systems to Riyadh-based investment group Algihaz Holding.

    The projects are located in Najran, Madaya and Khamis Mushait.

    According to an industry source, the contracts are valued at more than $800m.

    Surging growth

    The overall capacity of deployed battery energy storage systems globally is expected to reach 127GW by 2027, up from an estimated cumulative deployment of 36.7GW at the end of 2023, according to GlobalData.

    The global information services provider cited Chinese companies BYD and CATL and South Korean companies LG Energy Solutions and Samsung SDI among the top battery technology providers globally.

    Carmakers Tesla, Volkswagen, Stellantis, General Motors, Mitsubishi Motors and Hyundai were identified as the key end markets for battery products so far.

    GlobalData expects battery energy storage deployment to increase "due to a large number of countries opting for battery storage systems to enhance their power sector transformation".

    https://image.digitalinsightresearch.in/uploads/NewsArticle/12779739/main.gif
    Jennifer Aguinaldo
  • Saudi Arabia receives 4.5GW solar and wind prequalifications

    22 October 2024

     

    On 22 October, utility and renewable energy developers submitted their statements of qualifications (SOQs) for the contracts to develop five renewable energy independent power projects (IPPs) in Saudi Arabia.

    Saudi Arabia's principal buyer, Saudi Power Procurement Company (SPPC), issued the prequalification request for the IPPs making up the sixth round of the kingdom's National Renewable Energy Programme (NREP) on 29 September.

    Firms that are understood to have submitted SOQs include international developers such as Japan's Marubeni and Jera; France's EDF Renewables, Engie and TotalEnergies Renewables; as well as Chinese and local utility developers.

    The projects, comprising four solar photovoltaic (PV) IPPs and one wind IPP, will have a total combined capacity of 4,500MW.

    The following schemes comprise the NREP's sixth round:

    • 1,500MW Dawadmi wind IPP (Riyadh)
    • 1,400MW Najran solar PV IPP (Najran)
    • 600MW Samtah solar PV IPP (Jizan)
    • 600MW Al-Darb solar PV IPP (Jizan)
    • 400MW Al-Sufun solar PV IPP (Hail)

    SPPC is responsible for the pre-development, tendering and subsequent offtaking of the energy from the projects.

    US/India-based Synergy Consulting is providing financial advisory services to SPPC for the NREP sixth-round tender. Germany's Fichtner Consulting and US-headquartered CMS are providing technical and legal consultancy services, respectively.

    SPPC revealed the following lowest and second-lowest bidders for the contracts to develop four solar PV projects under the fourth round of the NREP on 21 October.

    2,000MW Al-Sadawi solar IPP (Eastern Province)

    • L1: Abu Dhabi Future Energy (UAE)/Korea Electric Power Corporation (Kepco, South Korea)/GD Power Development (China): $c1.29 a kilowatt-hour (kWh)
    • L2: SPIC Huanghe Hydropower Development (China)/EDF Renewables (France): $c1.31/kWh

    Al-Masaa solar IPP (Hail): 1,000MW

    • L1: SPIC/EDF Renewables (France): $c1.36/kWh
    • L2: AlJomaih Energy & Water (local) / TotalEnergies Renewables (France): $c1.40/kWh

    Al-Hinakiyah 2 solar IPP (Medina): 400MW

    • L1: SPIC/EDF: $c1.51/kWh
    • L2: Masdar/Kepco/Nesma: $c1.57/kWh

    Rabigh 2 solar IPP (Mecca): 300MW

    • L1: AlJomaih Energy & Water / TotalEnergies Renewables: $c1.78/kWh
    • L2: Masdar/Kepco/Nesma: $c1.89/kWh

    MEED previously reported that SPPC plans to award the NREP round-five contract before the end of the year.

    Photo: Pixabay

    https://image.digitalinsightresearch.in/uploads/NewsArticle/12774001/main0411.jpg
    Jennifer Aguinaldo
  • Oman awards $186.5m sewer network packages

    22 October 2024

    Oman's Nama Water Services has awarded several contracts with a total combined value of $186.5m for the construction and development of packages of a sewer network catering to Muscat.

    The B7A contract to build a sewer network comprising a main trunk sewer and pumping station in South Azaibah in the Muscat Governate has been awarded to the local United Gulf Construction Company, which offered to build the project for $54.5m.

    Nama Water Services tendered the contract in September last year. In addition to the supply and installation of pumping stations, the scope includes the construction of a 3.5-kilometre (km) gravity sewer network and property and house connection chambers.

    Nama Water Services awarded a second contract – C13 Package C4 – worth $30m to the local firm Target. The main scope includes the construction of a 16km gravity sewer network with diameters ranging from 200 millimetres (mm) to 600mm in Oman's Seeb catchment. It also includes the construction of about 265 gravity sewer manholes.

    Cairo-headquartered Arab Contractors won a $35m contract to construct a sewer network at the C5A and C5B areas in the Aseeb catchment in Muscat.

    C5A involves the construction of a 35km gravity sewer network with diametres of 200mm-900mm and 420 gravity sewer manholes. 

    C5B entails the construction of a 32km gravity sewer network with similar diametres to C5A, and a further 375 sewer manholes.

    Nama Water Services awarded a fourth contract to Target. Valued at $67m, it involves the construction of sewer network B7D, as part of the Bausher sewer infrastructure at Al-Ansab in Oman.

    The main project scope involves the construction of a 75km gravity sewer network, 103km of property and house connection chambers and a pump station.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/12772678/main.jpg
    Jennifer Aguinaldo
  • Team offers $c1.29/kWh for 2GW Sadawi solar IPP project

    21 October 2024

    A developer team that includes UAE-based Abu Dhabi Future Energy Company (Masdar) has submitted the lowest bid for a contract to develop the 2,000MW Al-Sadawi solar independent power project (IPP) in Saudi Arabia.

    The consortium, which includes South Korea's Korea Electric Power Corporation (Kepco) and China's GD Power Development, submitted a levelised cost of electricity of hals 4.847 ($c1.29) a kilowatt-hour (kWh) for the contract to develop the scheme, which is located in the Eastern Province.

    The second-lowest bidder is a team that includes China's SPIC Huanghe Hydropower Development and France's EDF Renewables, which offered to develop the project for $c1.31/kWh.

    Saudi Power Procurement Company (SPPC) received six proposals from companies for the contracts to develop and operate four solar photovoltaic (PV) IPP projects in Saudi Arabia in August.

    The projects, which have a total combined capacity of 3,700MW, are being tendered under the fifth procurement round of the kingdom's National Renewable Energy Programme (NREP).

    According to SPPC, the lowest and second-lowest bidders in the remaining schemes under round five of the NREP are:

    Al-Masaa solar IPP (Hail): 1,000MW

    • L1: SPIC/EDF Renewables (France): $c1.36/kWh
    • L2: AlJomaih Energy & Water (local) / TotalEnergies Renewables (France): $c1.40/kWh

    Al-Hinakiyah 2 solar IPP (Medina): 400MW

    • L1: SPIC/EDF: $c1.51/kWh
    • L2: Masdar/Kepco/Nesma:  $c1.57/kWh

    Rabigh 2 solar IPP (Mecca): 300MW

    • L1: AlJomaih Energy & Water / TotalEnergies Renewables: $c1.78/kWh
    • L2: Masdar/Kepco/Nesma: $c1.89/kWh

    Saudi utility developer Acwa Power is not among the 23 companies that were prequalified to bid for the fifth round of NREP projects.

    US/India-based Synergy Consulting is providing financial advisory services to SPPC for the NREP fifth-round tender. Germany's Fichtner Consulting is providing technical consultancy services.

    The round five solar PV IPPs take the total capacity of publicly tendered renewable energy projects in Saudi Arabia to over 10,300MW. Solar PV IPPs account for 79%, or about 8,100MW, of the total capacity.

    Four wind IPPs, one of which has yet to be awarded, account for the remaining capacity.

    SPPC is procuring 30% of the kingdom's target renewable energy by 2030. Saudi sovereign wealth vehicle the Public Investment Fund (PIF) is procuring the rest through the Price Discovery Scheme. The PIF has appointed Acwa Power, which it partly owns, as principal partner for these projects.

    The Saudi Energy Ministry recently said that the kingdom plans to procure 20,000MW of renewable energy capacity annually, starting this year and until 2030.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/12768211/main.jpg
    Jennifer Aguinaldo
  • Ashghal tenders sewerage works

    21 October 2024

    Qatar’s Public Works Authority (Ashghal) has issued a tender for the construction of the remaining works for two packages of the Al-Kheesa foul sewer network.

    According to Ashghal's website, the project packages are called C2018/7 and C2017/118.

    It issued the tender on 9 October and expects to receive bids by 10 November. Asghal set the bid bond for the contract at QR1.7m ($467,000).

    MEED understands the project is located in the Al-Wajba area and is expected to be awarded in March 2025.

    It is one of the most recent infrastructure packages tendered by the authority, which oversaw the multibillion-dollar Local Roads and Drainage Programme (LRDP) in the run-up to the state's hosting of the Fifa World Cup in 2022.

    LRDP includes more than 200 road and drainage schemes worth an estimated QR53.2bn ($14.6bn).

    In September, Ashghal issued a tender for the construction of a road network in the Izghawa and Al-Themaid areas in the northwest of Doha.

    The project involves the construction of a single- and dual-carriageway road network in the area. The overall project is being procured in two work packages.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/12767589/main1835.jpg
    Jennifer Aguinaldo