Hyundai venture to establish Saudi engine production
Left to right: Rasheed Al Shubaili, CEO, Dussur; Zaid Murshed, vice president, new business development, Saudi Aramco; and Kidon Chang, CEO engine business, Hyundai Heavy Industries
MAN Diesel & Turbo two-stroke and HiMSEN four-stroke engines are to be manufactured in Saudi Arabia under a joint venture between Hyundai Heavy Industries, Saudi Aramco and Saudi investment company Dussur.
The three companies have signed a memorandum of understanding that will see them invest US$400 million in an engine factory, to open in 2019. The facility, with production capacity for around 200 engines a year, will be established at the King Salman Global Maritime Industries Complex at Ras Al-Khair.
The venture represents a first licensing agreement for Hyundai’s HiMSEN engine range, which has hitherto only been produced in Korea. The MAN two-stroke engines will be built and serviced under a sub-license of Hyundai’s existing agreement with the engine designer.
The memorandum lays out a comprehensive engine and pump business cooperation framework comprising the manufacture of engines and marine pumps as well as sales and service in the Middle East and North Africa.
Saudi Aramco said that the venture would benefit from competitive production costs due to the supply of components from the casting and forging facility in Ras Al-Khair. Synergies will also be driven by building two- and four-stroke engines in one shop, with demand for engines and pumps secured from the facility’s shipyard business. The forge, foundry and shipyard in Ras Al-Khair are operated under joint ventures led by Saudi Aramco.
The move follows an earlier agreement signed in November 2015 between Hyundai Heavy Industries and Saudi Aramco for businesses including shipyards, marine engines and industrial plant. The new venture will also include the manufacture and sale of engines for power generation.