RIYADH: Saudi Arabia’s King Salman Energy Park and China’s Dalipal Holdings have signed a 25-year lease as part of a $2.1 billion deal to build an advanced energy equipment manufacturing base in the Kingdom.
The project’s first phase is expected to involve an investment of about $600 million, with the facility spanning 1.03 million sq. metres within SPARK, the Saudi Press Agency reported.
Dalipal International for Industry Co., a wholly owned subsidiary of Dalipal Holdings, will develop the site to manufacture seamless steel pipes for oil and gas wells, drill pipes and pipes for hydrogen transportation.
The facility is intended to serve Saudi Arabia, the wider Middle East and international markets.
The agreement builds on a letter of intent signed by SPARK and Dalipal in November 2024 at the ADIPEC energy conference, advancing the Chinese company’s plans to expand its manufacturing footprint in the Kingdom.
The investment aligns with Saudi Arabia’s efforts to expand domestic industrial capacity and localize strategic supply chains under its National Industrial Strategy, which aims to double industrial gross domestic product and significantly increase exports by 2030.
Investment, expansion plans
Mishal Al-Zughaibi, president and CEO of SPARK, said the signing of the 25-year lease agreement marked a pivotal milestone in Dalipal’s investment journey at the industrial park, SPA reported.
“The initial investment of $600 million, along with the overall investment ambition of approximately $2.1 billion, confirms Dalipal’s commitment to Saudi Arabia and the confidence of leading Chinese industrial companies in the Kingdom’s long-term growth prospects,” SPA quoted him as saying.
“He praised the partnership with Dalipal in establishing a world-class manufacturing platform that will enhance localization, develop high-value industrial capabilities, and serve energy markets throughout the region,” the report added.
Manufacturing plans target energy supply chains
The project is expected to strengthen Saudi Arabia’s domestic manufacturing capabilities and support the localization of strategic energy-sector supply chains. Its location within SPARK provides access to industrial infrastructure, utilities and logistics services, as well as proximity to major energy and industrial markets in the Kingdom.
Meng Fanyong, chairman of Dalipal Holdings, said Saudi Arabia was a strategically important market and a key pillar of the company’s international expansion strategy.
Establishing a manufacturing base at SPARK would bring the company closer to its customers, improve regional supply-chain efficiency and provide a platform for long-term growth in the Middle East, he said.
Fanyong added that the project could become a benchmark for economic cooperation between China and Saudi Arabia.