SRJ Secures $23.8M Middle East JV to Power NOC Asset Integrity
SRJ Technologies has partnered with CAPSA Engineering in a $23.8 million joint venture to deliver critical electrical asset integrity services for a Middle Eastern National Oil Company, marking a major step in its regional expansion.
- Joint Venture Agreement signed with CAPSA Engineering & Contracting L.L.C.
- Contract valued at US$23.8 million over four years with a two-year extension option
- SRJ to deliver services through its UAE subsidiary, First Avenue General Contracting
- Scope covers electrical integrity services for NOC’s gas operation and maintenance sites
- SRJ expects to realize approximately 50% of total contract value
Strategic Partnership in the Middle East
SRJ Technologies Group Plc (ASX, SRJ) has taken a significant leap forward in its Middle Eastern ambitions by entering a joint venture with CAPSA Engineering & Contracting L.L.C., a National Oil Company (NOC)-registered entity. This partnership is set to deliver asset integrity electrical services across the NOC’s gas operation and maintenance sites, under a contract valued at US$23.8 million over an initial four-year term, with an option to extend for an additional two years.
The collaboration will be executed through SRJ’s recently acquired UAE subsidiary, First Avenue General Contracting – Sole Proprietorship LLC, which positions SRJ as a fully embedded regional player. This JV not only solidifies SRJ’s foothold in a competitive market but also marks its transition from market entry to active execution of multi-year projects in the region.
Contract Structure and Revenue Model
The contract operates under a call-off framework, where the NOC issues discrete orders for specific tasks as operational needs arise. Each call-off is treated as a separate project with defined scopes, profit and loss statements, and cash flow profiles. This structure allows both JV partners to share risks and rewards proportionally based on their contributions.
SRJ anticipates capturing around 50% of the total contract value, though the exact revenue and margin timing remain uncertain due to the variable nature of call-off orders. Payments from the NOC will be managed through a jointly operated bank account, ensuring transparency and timely settlements.
Operational and Financial Safeguards
Under the joint venture agreement, SRJ is responsible for delivering its allocated scope, including management, personnel, materials, and equipment. The company has also provided a performance bank guarantee margin of US$13,000, underscoring its commitment to meeting contractual obligations.
Liabilities within the JV are capped to protect SRJ, with clear provisions for termination in cases of material breach or insolvency. This risk management framework is crucial given the complexities of operating in the Middle East’s energy sector.
Implications for SRJ’s Growth Strategy
This contract award is a strong endorsement of SRJ’s technical capabilities, safety standards, and service quality. It supports the safe and efficient operation of the NOC’s gas infrastructure portfolio and aligns with SRJ’s broader strategy to accelerate regional growth through joint ventures and direct tendering opportunities.
Mobilisation efforts are already underway, and SRJ is actively pursuing additional JV opportunities to build on this momentum. The company’s advanced robotic and UAV inspection technologies, combined with its consulting expertise, position it well to meet the evolving demands of asset integrity management in the energy sector.
Bottom Line?
SRJ’s Middle East JV marks a pivotal step in its regional expansion, but future revenue hinges on the pace and scale of call-off orders.
Questions in the middle?
- How quickly will the NOC issue call-off orders, and what volume can SRJ expect?
- What are the specific risks SRJ faces in managing its scope within the JV framework?
- How will SRJ leverage this JV to secure direct contracts with the NOC in the future?
