Al Gharbia Pipe Company (AGPC) is a joint venture in the United Arab Emirates (UAE) that manufactures large-diameter welded pipes for pipelines. JFE Steel and Marubeni-Itochu Steel hold stakes in the company. Currently AGPC is celebrating its fourth anniversary since beginning commercial production. AGPC has endured various challenging conditions, including the COVID-19 pandemic breaking out right after the company began operations, and they have also struggled due to stagnant crude oil prices. Currently AGPC’s business is on track to success due to the increase in the number of energy development projects. For this on-site report we visited AGPC’s plant in UAE.

  The Khalifa Economic Zone was established in the expansive desert of Al Gharbia, near Abu Dhabi, UAE. AGPC is located in this Zone, and the mother factory of AGPC’s plant is JFE Steel West Japan Works Fukuyama District’s UOE pipe plant.

  AGPC was established in May 2015 and construction of its plant began in October of the same year. The plant’s core facilities, including its press bending pipe mill, were manufactured by the German company SMS. After undergoing performance assurance trials, AGPC began commercial production from September 2019. But right after they started production, the world began to see a spread in COVID-19 infections.

  Mr. Mitsuru Anezaki (currently President of K&I Tubular Corporation as of October 1st, 2023), who at the time as General Manager of JFE Steel’s Energy Industry Steel Export Department first proposed the establishment of AGPC and was later appointed as AGPC’s first President in October 2017, looked back at when the COVID-19 pandemic broke out and commented “Operators couldn’t go back to Japan due to lockdown measures and restrictions on overseas travel. Cluster infections frequently occurred at the employee dormitory, and there was a drop in pipe demand.”

  AGPC was able to overcome this challenge largely due to having sympathetic shareholders. Mr. Anezaki expressed his gratitude toward those shareholders. “Our local partner ADQ and also JFE Steel and Marubeni-Itochu Steel were confident that favorable market conditions will eventually return and remained patient regarding our situation.”

  When AGPC was first established, its local partner was SENAAT, an investment firm owned by the Abu Dhabi government. In 2020 during the COVID-19 pandemic, AGPC’s partner changed from SENAAT to ADQ, Abu Dhabi’s largest state-owned company based in Abu Dhabi.

  ADQ is an enormous corporate group which owns such companies as the steelmaker Emirates Steel Arkan and also Etihad Airways and Emirates Nuclear Energy Corporation (ENEC). Partly due to the Abu Dhabi government actively pursuing making their industries more sophisticated, ADQ is said to be supportive of AGPC as well.

  The strengths of AGPC lie in the fact that they can reduce ocean freight rates due to manufacturing large-diameter welded pipes in a location with high demand, and also in the fact that they have close ties with the local Abu Dhabi market.

  The pipes used by the Abu Dhabi National Oil Company (ADNOC) are chosen through competitive bidding, and various companies including Indian steelmakers participate in this bidding process. In addition, no duties are imposed on the pipes imported by ADNOC.

  Although AGPC is a local company, it is still not easy for them to receive orders, yet the company has been successful in acquiring as many ADNOC-related projects as they can manage by utilizing the advantages of locally producing materials. Due to this success, every year since its establishment AGPC has steadily been increasing their production volume.

  As AGPC steadily developed their manufacturing capabilities, from last year the demand for gas pipelines recovered and has begun to provide a boost to their business.

  While AGPC has not made any major capital investments, their annual production capacity has increased from their initial capacity of 240,000 tons to their current capacity of 360,000 tons through making improvements to productivity and from seeing an increase in projects for larger diameter pipes. Depending on whether AGPC can receive orders from a major business deal currently being negotiated, there may be a possibility that AGPC can begin full-scale operations from 2024.

  In addition to domestic projects within UAE, AGPC has begun to increase exports to surrounding countries through the sales capabilities of Marubeni-Itochu Steel. AGPC has also been seeing an increase in the number of available business opportunities due to making progress in terms of acquiring approvals from not only customers in Gulf states but also world-leading customers as well.

  Mr. Noritsugu Mifune, who was assigned to AGPC in 2015 and appointed as the succeeding President after Mr. Anezaki in July, enthusiastically stated “We have acquired the necessary technological and production capabilities, and it is now time for us to realize our full potential.”

  The employees that Mr. Mifune personally interviewed and recruited during the early years of AGPC have accumulated experience and improved their skills. President Mifune commented about increasing AGPC’s production going forward. “We will promote making our employees multi-skilled, minimize fixed costs and pursue efficient production while ensuring safety.” AGPC’s goal is to become the leading pipe manufacturer in the Middle East that can thrive on the world stage, and in order to achieve this goal AGPC plans to strengthen their promotion of the company through participating in the Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC) and through the use of social media platforms.

  UAE was the Presidency of the UN Climate Change Conference held this year (COP28), and it is said that the country is actively pursuing measures related to reducing CO2 emissions. It is expected that demand for pipes will increase in relation to oil/gas pipelines and also new demand will emerge in relation to green projects, including hydrogen pipelines and CCUS projects. AGPC will pursue developing future core businesses by cooperating with JFE Steel, which has been focusing their efforts on technologies related to carbon neutrality.