Manufacturing of Whipstocks

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Overview

This opportunity entails developing the value chain for the production of whipstocks to serve the KSA and GCC oil and gas industry.

The overall demand for whipstocks in Saudi Arabia has been growing, estimated to be 510 units valued at USD 21 million. Driven by a strong outlook on multilateral well drilling, demand is forecasted to increase at an annual growth rate of ~5% to reach 770 units by 2022. Currently, KSA demand for whipstocks guns is addressed fully through imports, presenting a great opportunity for investors to localize production. In 2016, demand for whipstocks is ~90% for hydraulic whipstocks and ~10% for mechanical Whipstocks. The split is expected to remain relatively the same till 2022.

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 ~640 units valued at USD 44 million in 2017 to ~800 units by 2022.

In addition to an increasing market demand, Saudi has an attractive cost base including low labor, land, utilities and logistics cost.

The focus of this opportunity is on production and testing & assembly of whipstocks. These opportunities entail:

  • Production: establish a fabrication shop to manufacture Whipstock system components
  • Production: establish a lathe/CNC shop to fabricate metal components
  • Production: establish local facilities to conduct surface treatment and finishing services
  • Testing and Assembly: Set up an assembly and testing center for Whipstocks prior to use in operations

However, there are additional opportunities for localization across the whipstocks manufacturing value chain. Opportunities across the value chain include:

  • Design: establish a Whipstock design and R&D office to develop Whipstock designs fit for KSA requirements
  • Input materials: partner with steel suppliers to produce raw materials as per the required specifications
  • Lifecycle management: Establish after-sales service centers to serve requirement for retrievable Whipstocks conducting multiple trips to drill several laterals from single wellbore

Opportunity Details

Industrial and Manufacturing
Sector
Industrial Equipment & Spare Parts
Sub-sector
To be determined by the investor
Location
To be assessed by investor (cost drivers and other financial figures to be shared upon request)
Investment size
Open to starting the project as soon as possible
Timeline

Investment Model

Model: Opportunity to consider different operating models:
  • Pure private sector model
  • Joint venture with local player

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