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British Offset Office and the Saudi British Economic Offset Programme

The Saudi British Economic Offset Programme (SBEOP) has been in operation for more than twenty years and it continues to attract inward investment into Saudi Arabia through the creation of joint ventures across a range of industrial sectors.

The SBEOP is managed on behalf of the UK Government by the British Offset Office, which has offices in London and Riyadh.

To date fifteen projects have implemented under the SBEOP with total capital investment exceeding SR9.5bn. These joint venture projects have created more than 2,300 jobs with exports totalling in excess of SR10 billion. Many more projects are currently being developed or are under consideration.

Despite the global economic downturn, Saudi Arabia remains attractive for inward investment and a number of projects have implemented in the last few years under the Offset Programme. The Jubail Energy Services Company (JESCO) is a SR2.4bn seamless pipe manufacturing facility which employs more than 700 staff of which approximately 60% are Saudi nationals. This joint venture between the local Saudi firm Taqa and the Swiss company Durferco, is located at the Royal Commission's Jubail Industrial City which is reputed to be the largest industrial complex of its kind in the world.

Another project implemented under the Programme has been the Arabian Amines Company, also located in Jubail and which is a joint venture between the Al-Zamil Group and the US Huntsman Corporation. It manufactures ethyleneamines for use in a diverse range of applications from asphalt additives to fabric softeners.

The most recent success for the Offset Programme has been the Global Pipe Company, a joint venture between Erndtebrücker Eisenwerk (EEW) of Germany and a consortium of local Saudi companies including Saudi Steel Pipe Company and Pan Gulf Holding, which manufactures large diameter Longitudinal Submerged Arc-Welded (LSAW) pipes for use in the oil & gas, power and water sectors. The new purpose-built facility covers over 120,000m2 and houses impressive state of the art equipment including some of the largest pipe forming equipment in the world. Commercial production started earlier this year for both Line and Structural Tubular Pipe. Production capacity will be 170,000 tonnes per annum for Line Pipe and 30,000 tonnes per annum for Structural Tubular Pipe.

The SBEOP allows inward investment from companies from most countries around the world.  British Offset is currently supporting companies from the UK, USA, Canada,  France, Germany, Italy, Switzerland and Japan and helping them with their joint venture projects from first concepts through to formal proposals and implementation.

Over the years British Offset has build up considerable experience of assisting with the development of joint ventures in Saudi Arabia and its links with key decision makers in the Saudi Government, including the Saudi Arabian General Investment Authority and the National Industrial Clusters Development Programme, can help bring early resolution of issues which may emerge during the formation of a joint venture or indeed once it has implemented.

The SBEOP offers many advantages, including help with partner identification, free investment bank advice in the early stages of project development and advice and support in obtaining the necessary Saudi Government approvals. A major benefit offered to the foreign partner of a joint venture is access to non-recourse finance for up to 50% of their equity share. Many projects facilitated through the Offset Programme have taken advantage of this equity loan facility which is designed to reduce financial exposure and enhance business returns..

More information on the Saudi British Economic Offset Programme and the role of British Offset can be found on our website at www.britishoffset.com

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