Lamprell Part of a Joint Venture with Aramco to Build a Major Maritime Yard in Saudi Arabia
Wednesday 31 May 2017
Lamprell said it is to invest up to a maximum of US$140mln over the course of the construction and will hold 20% of the joint venture’s issued share capital.
Lamprell PLC (LON:LAM) saw its shares jump higher this morning after the small cap oilfield services group revealed it is part of a major joint venture, led by Saudi Aramco, a subsidiary of the national oil company of Saudi Arabia, to build a shipyard on the kingdom's east coast.
The proposed joint venture relating to the building of the Maritime Yard within the King Salman International Complex for Maritime Industries & Services will also include the National Shipping Co of Saudi Arabia (Bahri), and South Korea's Hyundai Heavy Industries Co.
When fully constructed, the Maritime Yard is expected to be the largest in the Arabian Gulf in terms of production capacity and scale, and is forecast to be partially operational by 2019 and fully operational by 2022.
Saudi Aramco, which announced a memorandum of understanding for the project in January 2016, has given gave no financial details of the joint venture, although it previously said the project will cost over 20bn riyals (US$5.3bn).
Lamprell will hold 20% of the joint venture’s issued share capital
In its statement today, Lamprell said it is to invest up to a maximum of US$140mln over the course of the construction of the Maritime Yard from existing financial resources and future cash flows and will hold 20% of the joint venture’s issued share capital.
The London-listed group said the deal provides it with “a critical point of entry to the Saudi market with exposure to Saudi Aramco, the world's largest oil company.”
Christopher McDonald, Lamprell’s chief executive, said: "We are excited to announce this transformational transaction which will not only make Lamprell a participant in potentially one of the largest yards in the Arabian Gulf but also provide access to the most important market in the industry and one of the largest players in the sector.
“The transaction will enable growth in scale beyond Lamprell's capability as a stand-alone entity and will allow the Company to strengthen its competitive position through efficiencies, diversification and broader reach.”
In reaction, Lamprell shares gained nearly 12%, or 12p to 113p in early morning trading.