LONDON: A joint venture involving Saudi Aramco has kicked off construction work at a new shipyard on Saudi Arabia’s east coast, it was announced on Friday. Consortium member Lamprell said in a statement that the JV, International Maritime Industries (IMI), started operations after reaching agreement for a loan from the Saudi Industrial Development Fund (SIDF). SIDF agreed in principle last year to provide $1 billion in financing for the ambitious project. IMI shareholders include UAE-based Lamprell, Aramco, National Shipping Co. of Saudi Arabia (Bahri) and South Korea’s Hyundai Heavy Industries Co. An Aramco executive will be CEO of the project, which Aramco has previously said will cost about $5 billion. Lamprell’s anticipated total equity contribution over the construction period is up to $140 million, Lamprell’s statement said. The nearly 12 million square-meter facility is planned to have an annual capacity to manufacture four offshore rigs and over 40 vessels, including three Very Large Crude Carriers (VLCCs), and service over 260 maritime products. The Lamprell statement said the deal was “for the establishment of a major maritime yard at the Ras Al-Khair site in eastern Saudi Arabia”. It added that in relation to the shareholders’ agreement, all conditions had now been completed, meaning that IMI could formally commence business. An important condition was the entry by IMI into the loan agreement with the proposed government lender, SIDF. “In addition to the previously mentioned offtake agreements and significant investment made by the Saudi government in the facility’s infrastructure, the loan agreement is expected be a cornerstone for the success of the IMI yard,” said Lamprell. It added: “The construction process at the site is underway with dredging and associated activities in progress. The partners have made significant progress in creating the business infrastructure, including the management organization, the internal governance structure and the detailed business plan.” Work at the site began after the first capital contribution by each partner in accordance with their pro rata share and in line with the original drawdown schedule. Lamprell’s first tranche amounted to $20 million which was invested in 2017, and would be used to pay for initial start-up costs of the business including staff hire and long lead item procurement. Linked to one of the offtake agreements, ARO Drilling would order 20 jackup rigs from the IMI yard over the next ten years. Significant component parts of the first two rigs were expected to be subcontracted to Lamprell’s UAE facilities. Christopher McDonald, Lamprell CEO, said: “We have been working closely with our partners on the establishment of the IMI business over the past few months and we are very pleased to see such tangible progress toward the operational phase, now that the conditions under the shareholders’ agreement have been completed.” McDonald said that IMI had the capability of becoming a leading regional and global service provider to the rig and vessel markets. He welcomed the selection of new LJ43 jackup rig designed with GustoMSC for rigs under the offtake agreement. “This will further strengthen Lamprell’s position in our traditional markets,” said McDonald.