Arkad-ABB joint venture to be formed by 31 December

21 December 2017
ABB’s wider strategy is to ‘change its EPC business model’

Swiss industrial technologies provider ABB has announced it expects transactions for the formation of a joint venture (JV) company with Saudi-based Arkad Engineering and Construction to conclude by 31 December 2017.

MEED reported in November ABB’s move to enter into a JV agreement with Arkad to create an oil and gas engineering, procurement and construction (EPC) services company, in which the latter will have the controlling stake. At the time no date was set for the closing of procedural formalities.

The Milan-headquartered Arkad-ABB is expected to not just deliver EPC work for the firm’s largest customer Saudi Aramco, but Arkad hopes to widen its footprint in other key oil and gas markets such as the UAE, Kuwait and Algeria backed by a portfolio strengthened by ABB’s engineering technologies.

ABB’s decision to divest some stake in its industrial automation division is part of its wider strategy to ‘change its EPC business model’ to achieve greater operational efficiency by the end of 2017 – its ‘transitional year’, the Zurich-headquartered company has stated.

The transfer of the turnkey oil and gas EPC business into the JV with Arkad is expected to result in a non-operational pre-tax charge to ABB's net income of approximately $75m for Q4 2017.

ABB declined to provide further information on the new oil and gas JV with Arkad, citing non-disclosure obligations before the conclusion of the process. Calls to Arkad in Saudi Arabia were unanswered.

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