MIS set to create more yard capacity through acquisitions

UAE-based offshore rig building company, Maritime Industrial Services (MIS), is looking to boost its yard capacity through acquisition of land and existing smaller yards in the UAE, said a senior company official.

The high demand for offshore drilling rigs, spurred by the increasing global demand for oil, has led to shortage of yard space at the MIS yard in Sharjah, calling for aggressive expansion.

MIS's current order book for oilrigs is full until 2010 and the company is in the process of opening its order book for 2011.

"We have already finalised arrangements to acquire a few existing yards in Sharjah and Dubai as part of our effort to boost yard capacity. We are still on the lookout for competent yards that suit our demand," Jerry Smith, MIS Managing Director told Emirates Business.

"Our strategy is to grow both organically and through strategic acquisitions. We are interested in finding firms that have a sound operation record, where the owners want to obtain some liquidity from their operations."

There is already an acute capacity shortage in the traditional international shipyards in areas such as Singapore, China and the United States Gulf Coast, and MIS wants to capitalise on that to ensure enough space for its operations in the region. The main MIS yard in Sharjah measures about 200,000 square metres. The company has a smaller yard in Sharjah that is 30,000 sqm, another one in Saudi Arabia spread over 90,000sqm and a 15,000 sqm one in Kuwait.

"We would be happy if we could find this amount of space elsewhere. We are looking for a yard in Abu Dhabi and more yards in Dubai and Sharjah," said the managing director.

New rig-building orders resulting from increasing drilling projects are fast helping to position MIS as well as the Middle East region as upcoming players in the global offshore rig building market.

MIS further boosted its profile last week with an order for construction of two jack-up drilling rigs from Bahrain-based MENA drill's sponsors, First Energy Bank BSC. The total value of the rig packages will be in excess of $400 million (Dh1.46bn) including tools, drill pipe, construction oversight and other associated costs.

This is MIS' largest single deal and it brings a total of four major rig-building deals signed by MIS since the beginning of this year, with a backlog of orders worth more than $1bn. The first rig is scheduled for delivery on September 30, 2010, and delivery of the second rig will follow three months later on December 31.

"This order will boost our profile in the region as a pioneer rig building company and we hope that it will boost the growing confidence that drilling companies are developing in locally manufactured rigs," said Smith after the signing of the agreement.

The rigs represent the anchor investment in the MENA drill fleet and are to be built according to the Super M2 designs of Friede & Goldman of Houston, Texas, United States.

They are capable of operating in water depths up to 100 metres to drill oil and gas exploration and development wells.

Recently, MIS signed rig-building contracts worth $335m for the design and construction of two offshore jack-up drilling rigs for Mosvold Middle East Jackup.

The two firm rigs (Hull 106 and Hull 108), are to be supplied by MIS on a turnkey basis and will be built at MIS' shipyard in Sharjah.

"We are the pioneers in off-shore rig-building in this region. With more orders coming our way, we believe we will be able to successfully make the region a hub for offshore rig-building," said Peter Convery, President and Chief Executive of MIS.

The Middle East and North Africa region is the world's premier holder of hydrocarbon resources and producer of hydrocarbons.

The GCC is investing heavily in a number of offshore oil and gas exploration projects to the tune of $60bn in the next three to four years. The new projects are meant to add oil and gas production capacity. This investment in more offshore projects is causing an unprecedented demand for rigs and workboats of all types.

The MIS yard in Sharjah is currently building a number of drilling rigs for customers in Africa, Europe and Asia, and undertaking major rig refurbishment projects for several leading international drilling contractors.

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