meed-logo

line1 line2 line3
SIGN IN / REGISTER

Aramco steps in to boost Saudi steel potential

10 May 2023

 

As the main engine facilitating Saudi Arabia’s Vision 2030 socio-economic transformation, Saudi Aramco is working to ensure its localisation initiatives meaningfully contribute to the programme.

The company is intensifying its localisation efforts by cultivating an in-kingdom supply chain to not only meet its business requirements, but also create specialised jobs for Saudi nationals.

Local manufacturing is a major element of this strategy, and Aramco has made key investments in the production of steel products – a vital business requirement – as part of its commitment.

SeAH Gulf Special Steel Industries (GSI), a joint venture (JV) in which Aramco is a stakeholder, began constructing a facility in February that will mainly produce steel pipes. The estimated $240m factory is located in the King Salman Energy Park (Spark) industrial facility. When it enters operation in 2025, it will have the capacity to produce 20,000 tonnes a year (t/y) of stainless steel seamless pipes and tubes.

On 1 May, Aramco entered into another JV to establish an integrated steel plate manufacturing complex in Saudi Arabia, which will help “increase localisation of the steel value chain”, according to Fahad M al-Abdul Kareem, senior vice-president of Industrial Services at Aramco.

Ras al-Khair steel complex

Aside from Aramco, the JV that will build the steel-plate production complex includes the kingdom’s sovereign wealth institution, the Public Investment Fund (PIF), and the Chinese steel manufacturing conglomerate Baoshan Iron & Steel Company (Baosteel).

The complex, deemed the first of its kind in Saudi Arabia, will be located in Ras al-Khair in the kingdom’s Eastern Province, which was recently designated as one of four new Special Economic Zones by Saudi Crown Prince Mohammed bin Salman.

The planned facility will have an output capacity of 1.5 million t/y and “serve strategic industrial sectors including pipelines, offshore platforms, rigs, tanks, pressure vessels, shipbuilding and others”, Al-Abdul Kareem tells MEED.

“The complex will bring together Aramco’s unrivalled energy and industrial services ecosystem, Baosteel’s advanced steel plate industry capability and PIF’s investment expertise,” he says.

Engineering, procurement and construction work on the project has been divided into several packages, which will be tendered soon, with a contract award expected by the second half of this year.

The steel complex will be able to start operating with hydrogen fuel without major equipment modifications as soon as the new hydrogen technology is ready
Fahad M al-Abdul Kareem, Aramco

Environmental impact

“This complex aims to be one of the lowest-carbon emissions, large-scale steel plate manufacturing facilities in the world based on currently announced projects,” says Al-Abdul Kareem.

Aramco signed a memorandum of understanding with Baosteel to conduct an engineering and feasibility study for the proposed steel plate complex in September 2021.

The plant will be equipped with a natural gas-based direct reduced iron (DRI) furnace and an electric arc furnace to reduce carbon dioxide (CO2) emissions from the steel-making process by up to 60 per cent compared with a traditional blast furnace, Aramco announced recently.

“The steel complex has also been designed to be hydrogen-compatible as a substitution for natural gas,” Al-Abdul Kareem adds. “It will therefore be able to start operating with hydrogen fuel without major equipment modifications as soon as the new hydrogen technology is ready for application.”

“This would enable the complex to make steel with up to 90 per cent less CO2 emissions than traditional coal-based steel production processes,” he explains.

Economic contributions

The steel plate factory’s workforce is expected to comprise 80 per cent Saudi nationals to meet Aramco’s Saudisation goals, he says. It is also projected to contribute $1.7bn to Saudi Arabia’s GDP every year.

The JV aims to export 30 per cent of its capacity to Middle East and North Africa (Mena) markets. “Through this plant, the kingdom is expected to be able to substitute imports by amounts close to SR4.9bn, or $1.3bn, annually,” says Al-Abdul Kareem.

To maximise its economic potential, the proposed complex will receive support from the Saudi government’s Shareek incentives programme for large companies. It has also been brought under Aramco’s Namaat local industrial investments programme.

“This project has the potential to create a tangible impact on the kingdom’s economy and contribute to Saudi Arabia’s GDP growth, generate new jobs, support the [In-Kingdom Total Value Add] iktva programme targets by adding to the local content production and lead to considerable import substitution,” the Aramco executive concludes.

https://image.digitalinsightresearch.in/uploads/NewsArticle/10826161/main.gif
Indrajit Sen

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

Click here to register
Exclusive from Meed
Related Articles
  • Executive briefing: US-Israel-Iran conflict

    6 March 2026

    Download the briefing

    In this executive briefing, Ed James and Colin Foreman from MEED outline the key developments in the US-Israel-Iran conflict and examine the potential economic, infrastructure and market impacts across the Middle East.

    Drawing on regional data and analysis, the briefing explores the drivers behind the escalation, the scale of attacks across GCC states, and the possible short- and long-term implications for energy markets, shipping, aviation and regional investment.

    For ongoing updates and verified reporting as events unfold, follow MEED’s mega thread here.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15890483/main.gif
    MEED Editorial
  • Kuwait extends bid deadline for Al-Khairan phase one IWPP

    6 March 2026

     

    Kuwait has extended bidding for the first phase of the Al-Khairan independent water and power producer (IWPP) project.

    The project is being procured by the Kuwait Authority for Partnership Projects (Kapp) and the Ministry of Electricity, Water & Renewable Energy (MEWRE).

    The facility will have a capacity of 1,800MW and 33 million imperial gallons a day (MIGD) of desalinated water.

    It will be located at Al-Khairan, adjacent to the Al-Zour South thermal plant.

    The new deadline is 30 April.

    The main contract was tendered last September, and the deadline had already been extended once, most recently until 4 March.

    Three consortiums and two individual companies were previously prequalified to participate.

    These include:

    • Abu Dhabi National Energy Company (Taqa) / A H Al-Sagar & Brothers (Saudi Arabia) / Jera (Japan)
    • Acwa (Saudi Arabia) / Gulf Investment Corporation (Kuwait)
    • China Power / Malakoff International (Malaysia) / Abdul Aziz Al-Ajlan Sons (Saudi Arabia)
    • Nebras Power (Qatar)                                                                                                                                        
    • Sumitomo Corporation (Japan)

    The Al-Khairan IWPP project is part of Kuwait’s long-term plan to expand power and water production capacity through public-private partnerships (PPPs).

    The winning bidder will sign a set of PPP agreements covering financing, design, construction, operation and transfer of the project.

    The energy conversion and water purchase agreement is expected to cover a 25-year supply period.

    Kapp extended another deadline recently for a contract to develop zone two of the third phase of the Al-Dibdibah power and Al-Shagaya renewable energy project.

    The PPP authority is procuring the 500MW solar photovoltaic independent power project (IPP) in partnership with the ministry.

    The bid submission deadline was moved to the end of April, a source close to the project told MEED.

    According to the MEWRE, the total generation capacity currently offered under partnership projects has reached 6,100MW, equivalent to about 30% of Kuwait’s existing power capacity.

    The ministry and Kapp are also preparing to tender the main contract for the 3,600MW Nuwaiseeb power and water desalination plant after plans were approved by Kuwait’s Council of Ministers last November.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15889101/main.jpg
    Mark Dowdall
  • UAE utilities say services stable amid tensions

    6 March 2026

    Register for MEED’s 14-day trial access 

    Abu Dhabi National Energy Company (Taqa) and Etihad Water & Electricity (EtihadWE) have confirmed that water and electricity services in the UAE are operating normally amid ongoing regional tensions.

    In a statement, Taqa said it had activated its risk management frameworks and “power generation, water desalination, transmission, distribution and wastewater services are operating safely and without interruption”.

    According to Etihad WE, services are being delivered with “approved response plans” and “precautionary operational procedures” amid the current regional circumstances.

    Taqa is one of the UAE’s largest integrated utilities, with assets including the Taweelah B independent power and water (IWPP) plant and the 2,400MW Fujairah F3 combined-cycle power plant.

    EtihadWE operates electricity and water distribution networks across the Northern Emirates, supplying more than two million residents.

    Iran’s recent missile attacks on energy infrastructure across the GCC in retaliation for US-Israel attacks have drawn renewed attention to the importance of the region’s utilities sector.

    While power and water assets have largely avoided damage, there have been some incidents affecting broader energy infrastructure.

    Saudi Aramco had shut down its Ras Tanura refinery following a drone strike, while US cloud provider Amazon Web Services reported service outages after incidents at two data centres in the UAE.

    In January, Taqa and Etihad won a contract alongside France’s Saur to develop and operate a major wastewater treatment plant in the UAE’s northern emirate of Ras Al-Khaimah.

    The Rakwa wastewater infrastructure project is RAK’s first public-private partnership for a sewage treatment plant.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15888121/main.jpg
    Mark Dowdall
  • Drawn-out conflict may shift planning priorities

    6 March 2026

    Commentary
    Mark Dowdall
    Power & water editor

    Across the GCC, power and water networks have largely been planned around steadily rising consumption, driven by population growth and cooling demand.

    A drawn-out conflict in the region may begin to change how planners think about these systems – particularly how they can keep operating if parts of the network are disrupted.

    On Thursday, Iran’s Energy Minister Abbas Aliabadi said that US-Israeli attacks had damaged water and electricity supply facilities in several parts of the country, while urging the public to be careful with water and electricity consumption.

    So far, major power and water infrastructure in the GCC has largely avoided damage. In the case of desalination, plants of this scale supply drinking water to millions of people, so striking them would immediately affect civilian populations and represent a significant escalation.

    There is also an element of mutual vulnerability. Iran relies on its own electricity and water infrastructure, and Aliabadi’s comments this week suggest those systems are already under pressure. Targeting desalination plants in the GCC could invite similar disruptions at home.

    However, if infrastructure disruption becomes a recurring risk in the region, the question may gradually shift from how to produce more water and electricity to how to reduce immediate reliance on continuous supply.

    Some elements of that thinking are already visible in the project pipeline. In Saudi Arabia, for example, total reservoir storage capacity has reached about 25.1 million cubic metres, with roughly 44% located in the Mecca region and 31% in Riyadh. This provides a buffer that can sustain supply temporarily if desalination production is disrupted.

    Additionally, the kingdom has about $8bn-worth of water storage projects in early study or feed stages. As regional tensions persist, schemes like this may move higher up the priority list.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15887101/main.jpg
    Mark Dowdall
  • US oil companies to profit while Middle East exports are curtailed

    6 March 2026

    While the oil and gas operations of the Middle East’s biggest producers are being dramatically curtailed by the conflict sparked by the US and Israel’s attack on Iran, US producers are likely to see windfall profits.

    So far, the list of oil and gas assets in the Mena region disrupted by the conflict is long and includes facilities in all GCC nations, as well as Iraq and Iran itself.

    In addition to oil fields and refineries that have been shut – either due to direct Iranian attacks or concerns over further strikes – about 20 million barrels a day (b/d) of production has been removed from the global market by the effective closure of the Strait of Hormuz.

    Oil price

    The disruption to global oil and gas supplies caused by the Iran conflict has pushed oil prices up by around 15%, with Brent briefly rising above $85 a barrel on 3 March – its highest level since July 2024.

    This has boosted investor optimism about the outlook for US oil companies.

    Texas-headquartered ExxonMobil made $56bn in profit in 2022 after Russia’s invasion of Ukraine created a sustained period of higher oil prices. It was a record year for the company, and it could see a similar bump this year if oil prices remain high.

    Shale response

    US shale producers are ramping up production to capitalise on higher oil prices, according to the Paris-based International Energy Agency (IEA).

    Recently drilled shale wells could add around 240,000 b/d of supply in May, and an additional 400,000 b/d could be added in the second half of the year, according to an IEA document cited by the Financial Times.

    Gas impact

    The impact of the Iran conflict on liquefied natural gas (LNG) prices has been even more pronounced than on oil, with several gas benchmarks hitting multi-year highs.

    The Dutch Title Transfer Facility rose by 55%, reaching its highest level since fuel markets spiked after Russia’s 2022 invasion of Ukraine.

    One of the key factors driving prices higher was Qatar – the world’s second-biggest LNG producer – halting exports on 2 March after Iranian attacks on several facilities.

    Qatar is expected to take at least several weeks to restart exports from its liquefaction terminals.

    Not only will time be required to ensure the export route through the Strait of Hormuz  is secure, but restarting LNG export terminals is also a gradual process. They require a slow restart to avoid damaging cryogenic equipment, which cools natural gas to around -160°C.

    In addition, LNG trains must be brought back online sequentially; Qatar’s Ras Laffan hub has 14 trains.

    US advantage

    While the world’s second-biggest LNG producer is likely to be offline for some time, the US – the world’s biggest LNG producer – is already operating near full capacity and is benefiting from the higher-price environment.

    Cheniere and Venture Global, the two biggest US LNG producers, have both seen their share prices rise amid the conflict.

    Cheniere shares are up 18% since the start of February, while Venture Global’s share price has risen 12% over the same period.

    The scale of additional revenues earned by US companies – and the revenue losses suffered in the Middle East’s oil and gas sector – will largely depend on how long the disruption linked to the Iran conflict continues.

    If the disruption persists and significant long-term damage is done to Middle East oil and gas infrastructure, US-based oil and gas companies could record another year of record profits.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15886759/main.png
    Wil Crisp