This opportunity entails establishing a manufacturing facility for packers to serve the KSA and GCC oil and gas industry.
The overall demand for packers in Saudi Arabia has been growing, estimated at 5,050 units valued at USD 173 million in 2016. Driven by the strong oil and gas production activity, demand is forecasted to increase at an annual growth rate of ~5% to reach ~8,150 units units by 2022.
In 2016, demand for packers was ~80% for isolation packers and ~20% for production packers. The split is expected to remain relatively the same till 2022. Currently, KSA demand for packers is addressed fully through imports, presenting a great opportunity for investors to localize production.
Beyond the KSA market, investors in Saudi have the opportunity to tap into the large regional market in the GCC which is expected to witness strong growth fueled by oil and gas production, expected to increase from ~6,800 units valued at USD 180 million in 2017 to 8,430 units by 2022.
In addition to an increasing market demand, Saudi has an attractive cost base including low labor, land, utilities and logistics cost. Also, KSA plans to localize Elastomers, previously a barrier for packers localization.
Sector