A key Pan Gulf subsidiary is keenly eyeing a greater role in manufacturing while gearing up to meet the increased demand through a major expansion of its warehousing space.
Pan Gulf Piping Systems (PGPS), a subsidiary of Pan Gulf Industrial Investments Company and a leading supplier of pipes in Saudi Arabia, has long-term plans to start production of butt-weld fittings in addition to expanding its stocking capacities.
An approved supplier of Saudi Aramco, which is one of its main customers, PGPS serves key sectors including construction, oil and gas, petrochemicals, engineering, and power and water. Among its ongoing projects is the Riyadh Metro project of the Arriyadh Development Company (ADA), where it is supplying pipes for the piling work.
PGPS offers single-window purchasing for a complete range of piping systems and related products such as valves, fittings and flanges and is now keenly looking at diversifying into manufacturing.
PGPS general manager Ahmed A Al Hashash cites two reasons for this move.
The first is Saudi Arabia’s vision to locally manufacture piping and piping-related materials, eliminating the need to import. “The kingdom already has a few local Saudi Aramco-approved manufacturers for pipes and flanges, so starting our own manufacturing plant for butt-weld fittings would be part of our long-term scope, and perfectly in line with the kingdom’s and Aramco’s vision,” he says.
The second reason, he says, is the long-term vision of Pan Gulf Industrial Investments Company to assume a greater role in manufacturing.
PGPS is also aiming to triple the size of its warehouse at its central hub in Riyadh to approximately 15,000 sq m. The existing warehouse is about 5,000 sq m in area.
The stockyard is important, says Al Hashash. “It is used as a central hub for the kingdom. Numerous transportation vehicles stop by and we dispatch material to meet the needs of customers in the south and east and even the northern part of the country.”
Apart from the Riyadh operation which serves as a hub to ensure prompt deliveries, PGPS has several other stockyards and branches across the kingdom. These include a stockyard in Jeddah, two large ones in the Eastern Province plus three fully-enclosed warehouses in the kingdom.
PGPS has supplied a number of major projects in the Riyadh area. It has delivered pipes for chilled water and fire-fighting systems to the Princess Nora bint Abdelrahman University, which has 32 colleges across Riyadh; and King Abdullah Financial District, King Saud University and the Information Technology and Communications Complex for Raidah Investment Company.
In terms of business, PGPS enjoyed an overall profit last year that climbed 20 per cent over 2013 figures, which the company attributed to a surge in sales related to Saudi Aramco projects and a rise in general construction and infrastructure projects, mainly in the Central Province, of which Riyadh is part.
The Riyadh branch accounts for approximately 27 per cent of total sales, and carbon steel and stainless steel pipes make up 60 per cent of orders received by the branch. Typically, PGPS products are used in the oil and gas industry and serve as a means for water transmission, general-purpose casing, piling, structural applications, as well as meeting the needs of mechanical components.
Commenting on how sales in Riyadh are faring, Al Hashash says: “If we were to take into consideration the last few months, it’s certainly on the rise. We hope it stays that way until the year-end. We believe the main reason for the increase in sales is the numerous construction and infrastructure projects currently under way or planned for the next few years. Two of the most active players for such projects are the Ministry of Health and the Ministry of Interior.”
PGPS lists several companies that have contributed significantly this increase. These include Al Rashid Trading and Contracting Company, Fawzan Trading and Contracting, Saudi Services for Electromechanical Services, Drake and Scull, and Saudi Oger. “These clients typically use a broad range of our materials as they undertake projects as entire packages – and particularly pipes, used for chilled water and fire-fighting applications,” says Al Hashash.
For the current year, the Riyadh branch will focus on projects related to construction and infrastructure, which are the company’s two main sources of revenue in the Central Province, says Al Hashash.
The Eastern Province office mainly relies on the oil and gas sector, he adds.
About prospects over the next three to four years, he says: “The ongoing increase in construction and infrastructural works in the capital does give us high hopes for mega projects.”