Aramco, NOV To Form Saudi Onshore Drilling Joint Venture

Saudi Aramco’s aim to localize oilfield services in the kingdom is taking another step forward with an onshore drilling partnership with National Oilwell Varco.

An NOV rig stationed in the Middle East. Source: NOV.

Saudi Aramco and National Oilwell Varco (NOV) have agreed to form a joint venture (JV) providing high-specification land rigs and drilling equipment in Saudi Arabia.

The JV will establish a rig and equipment manufacturing facility in Ras Al-Khair, near Jubail Industrial City on the kingdom’s east coast, with the capacity to manufacture 10 rigs/year and offer equipment repair services and recertification. It will also have the ability to supply drilling packages for offshore jack up rigs.

The JV will provide 50 rigs over a 10-year period to the previously established joint venture of Aramco and Nabors Industries, called Saudi Aramco Nabors Drilling Company, which started operations late last year.

The facility is expected to be commissioned by 2020, with the first rig delivered by 2021. NOV will own 70% of the JV, and Aramco will hold the remaining 30%. The JV will also establish an education center to train Saudi technicians in maintenance and operation of drilling technology.

Formation of the JV is part of $50 billion in agreements between Aramco and US energy firms announced last year, part of Saudi Arabia’s Vision 2030 reform that, in addition to diversifying the kingdom’s economy, intends to bring broad foreign investment, partnerships, and technology to its oil and gas industry.

“The new manufacturing facility will further strengthen the integrated portfolio of oilfield services and equipment being developed by the Saudi Aramco Development Company, which also optimizes Saudi Aramco’s supply chain costs and improves its agility,” said Ziad Al-Murshed, chief executive officer of the Saudi Aramco Development Company and executive director of new business development at Saudi Aramco.

“Over the past few years, Saudi Aramco has taken major steps to localize oilfield services in the kingdom, starting with drilling services, through establishing two rig operations joint ventures, one for onshore drilling and the other for offshore drilling,” said Al-Murshed. “This joint venture with NOV is a major step toward localizing oilfield equipment manufacturing and after-market services, starting with rig manufacturing.”

ARO Drilling, a 50-50 JV of Aramco and Rowan Companies that owns a small fleet of jack ups, also started operations late last year. The JV in April said it will add four more of Rowan’s jack ups to fulfill four 3-year contracts awarded by Aramco.

In deals with other major US service companies, Aramco in May enlisted Halliburton to bolster output from three Saudi shale fields via an unconventional gas stimulation services contract and, last December, tapped Schlumberger to provide drilling rigs and oil and gas well services over 3 years via two lump-sum contracts.

Schlumberger is developing an industrial manufacturing center in Aramco-operated King Salman Energy Park for upstream- and midstream-related products, including land rigs.