Key role for Omani-Japanese joint venture in PDO piping contract

By Conrad Prabhu — MUSCAT: Jan 28 – Muscat-based United Engineering Services LLC (UES), part of the well-diversified Omani business conglomerate MB Holding Group of Companies, is set to play a key role in the delivery of a $1.2 billion contract signed late last week by Petroleum Development Oman (PDO) for the supply of piping for its drilling operations. The contract, which has a significant In-Country Value (ICV) component, will see Japanese trading behemoth Sumitomo Corporation together with integrated Japanese steel producer Nippon Steel & Sumitomo Metal Corporation (NSSMC), supply thousands of tons of piping to PDO over the next five years, using the Special Economic Zone (SEZ) at Duqm as a storage and distribution hub.
Supply Chain Management (SCM) is a key feature of the contract — a service that will be provided by Sumitomo Corporation Tubular Services Oman (SCTSO), a joint venture between UES and Sumitomo Corporation Middle East. UES, a specialist provider of engineering services to the Oil & Gas Industry, among other sectors in the Sultanate and beyond, already has an operational presence in Duqm. Early last year, the company inked a 25-year agreement with Port of Duqm Company for the lease of a plot to be used for, among other things, the wet-testing of one-of-a-kind seafloor production machines built on behalf of Canadian registered Nautilus Minerals for offshore deep sea mining activities.
The Sumitomo Corporation/ UES JV has been offering supply chain management services to PDO, as the nation’s largest oil and gas producer, covering the storage of corrosion resistant alloy (CRA) steel piping and OCTG (Oil Country Tubular Goods) manufactured by Nippon Steel & Sumitomo Metal Corporation (NSSMC).  The latter has been supplying PDO with high-performance OCTG pipes — used to channel oil and gas to the surface — for nearly 15 years. As these pipes must be customized to the client’s specific requirements based on well conditions and reservoir pressures specific to a certain oil or gas field location, Supply Chain Management (SCM) is thus indispensable to the OCTG business.
“Sumitomo Corporation continues to supply high quality OCTGs and reliable Supply Chain Management services, which over the years have added value to PDO’s operations and to the Sultanate of Oman,” said the Japanese conglomerate in a statement following last Thursday’s contract signing.
‘‘This long-term and highly regarded partnership resulted in Sumitomo Corporation moving its supply base from Dubai to Sohar in 2011, as part of its drive to offer In-Country-Value for Oman. Further proof of Sumitomo Corporations commitment to ICV has now been demonstrated by its move to Duqm Port. As a result of the relocation, PDO and Sumitomo Corporation will make a significant contribution to Oman’s strategic objective of Duqm to be the country’s oil and gas hub for the future,” it stated.
The Japanese trading giant also pledged to “expand” the scope of its contract with PDO through the implementation of a ‘mill-to-well’ integrated supply chain management system that promises to optimise supply chain efficiencies and offer further cost savings for PDO.