Samsung Heavy, AMEC and Samsung Engineering Enter Joint Venture

Samsung will reinforce the engineering capability of its offshore plant sector through cooperation with a world-leading engineering company. Samsung Heavy Industries and Samsung Engineering announced on the 25th that they will establish a joint venture specialized in offshore engineering in Houston (US) jointly with AMEC, a UK-based firm.

Along Mustang (US) and Aker Solution (Norway) AMEC is considered one of the world’s three best engineering companies.

AMEC has 28,000 employees in 40 countries, and has provided FEED (Front-End Engineering and Design), detailed design and project management services for various offshore development projects operated by major global oil companies such as Shell, BP, ConocoPhilips and Petrobras.

The joint venture will be established in November in Houston (US), the global hub of offshore engineering, and will operate under the name AMEC Samsung Oil & Gas, LLC.

Samsung will hold 51% of shares in the joint venture, while AMEC will hold 49% of shares. Samsung Heavy Industries will have 51% of Samsung’s shares, while Samsung Engineering will have 49% of Samsung’s shares.

The first CEO of the joint venture will be appointed by Samsung Heavy Industries, and the CFO and COO will be appointed by Samsung Engineering and AMEC, respectively. Three companies will dispatch their employees to complete the work force of the joint venture, which will consist of 100 employees.

The establishment of the joint venture is the foundation for advancing SHI’s business competency to meet the rapidly growing offshore plant market demands.

Samsung will leverage the joint venture for FEED and the detailed design of the offshore production facilities to be ordered. By establishing the joint venture, Samsung is securing EPCI(Engineering, Procurement, Construction & Installation) competency for large offshore production facilities.

By securing EPCI competency, Samsung will be favorably positioned to secure a higher level of profitability than in its existing business structure, where it has to outsource a large part of design and procurement processes to overseas engineering firms.

Samsung plans to develop the joint venture into an expert engineering firm, providing Topside FEED and detailed design services.

Initially, employees of the joint venture will be dispatched from three companies, but the joint venture will recruit more employees to complete the work force, which will consist of about 500 employees by 2018.

Bain & Co predict that the offshore plant market will grow from USD 140 billion in 2011 to USD 310 billion by 2020, fueled by the global energy demand growth and continued oil price hikes. Douglas-Westwood, a market survey organization, predict that floating production facility investment for the next five years will reach USD 91 billion, and investments will be made to build over 120 offshore production facilities by 2017.

To respond to this trend, Samsung has focused on the offshore plant business including drill ships, made efforts to secure infrastructure for offshore plant production, including the installation of floating docks for offshore applications, and sought business partnerships with engineering companies.

Samsung has also developed the new subsea business of extracting and transporting crude oil from deep-sea oil fields, in order to achieve the new growth that will enable it to be a total solution provider for the plant industry, serving inland, offshore and subsea clients.

A spokesperson for Samsung said, “Our efforts to seek business partnerships with engineering companies with global competencies, as a response to the growing offshore plant market, have paid off. By establishing the joint venture, Samsung is able to further strengthen its competitiveness in winning new orders, which include securing EPCI competency for large offshore production facilities.”

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Press Release, October 30, 2012; Image: shi