(Source: Hunting Plc)
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Jindal SAW Ltd., a pipe manufacturer, has formed a new joint venture (JV) with Hunting Energy Services, a developer of premium connection solutions, to create India’s first premium oil country tubular goods (OCTG) 130,000-sq-ft threading plant in Nashik, with Jindal SAW Ltd. as a 51% owner in the JV.
The JV will enable India to supply OCTG products globally, providing an alternative source of OCTG products to companies engaged in oil and gas drilling activities. This partnership will also allow India to eliminate its reliance on imported OCTG products.
The initial investment in this JV will be about US$20 million to $25 million.
The agreement formalizes a closer working partnership between the two businesses, following a strategic alliance in 2019 between Jindal SAW Ltd. and Hunting Energy Services to develop their presence in the rapidly growing OCTG market in India.
This JV leverages Jindal SAW Ltd.’s location-specific capabilities and local workforce with Hunting’s patented premium connection threading technology to create a full range of sizes of seamless tubing and casing for deep oil and gas drilling activities. The venture fills a gap in the U.S. market by providing competitively priced premium OCTG (casing and tubing), accessories (couplings) and chrome OCTG supplies, giving U.S. companies an affordable high-quality alternative to existing limited offerings from a few key players.
The facility is targeted to be operational by year-end 2022, with three threading lines commissioned over time with an annual capacity of 50,000 metric tons. It is anticipated that the JV will employ about 100 staff members once fully operational and will achieve close to 70% in capacity in its second year of operation.
Expectations
As stated, this partnership provides an alternative source of affordable, high-quality OCTG products for U.S. oil and gas companies’ drilling activities, which is welcome news as this space has been dominated by a couple key players for a while, which limited companies’ OCTG options.
Hunting and Jindal have worked together for three years. During a Jan. 19 live call, the CEOs of each company said they have seen a lot of synergies. The JV is co-located with Jindal’s manufacturing facility, which provides operating synergies. The JV meets the drilling challenges of today’s market and also the tremendous demand in India’s energy market, the CEOs explained.
The JV also offers a compelling differentiated offering as it will be a one-stop shop providing a full-range of sizes plus training and service. Besides tubing and casing, there will be accessories, 2 7/8 inches up to 30 inches, carbon steel and corrosion-resistant.
The JV is expected to make $200 million per year, and the companies intend it to be the largest OCTG supplier in the world.
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