Saudi Aramco has signed two agreements with Nabors Industries and Rowan Companies for onshore and offshore drilling.
This new joint ventures are expected to encourage the domestic development of the Saudi energy sector. The deal will also boost the company’s In-Kingdom Total Value Add (iktva) programme and the government’s Saudi Vision 2030.
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Saudi Aramco president and CEO Amin H. Nasser said: “We look forward to successful partnerships with Nabors and Rowan to drive a best-in-class drilling industry, provide opportunities to manage drilling costs through increased collaboration, drive localisation of the energy value chain, and enhance In-Kingdom technical capabilities.
“These initiatives represent an unprecedented new large scale model of collaboration, with substantial value creation for both Saudi Aramco and its partners through a closer working relationship.
“These investments are part of a wider programme to leverage our core activities, to help enable the sustainable development of the Kingdom’s economy through diversification, and the development of an internationally competitive and dynamic local energy sector, supported by national champions."
In December 2015, Saudi Aramco started iktva programme that focuses on building domestic value creation, and maximising long-term economic growth of Saudi Arabia.
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By GlobalDataThis major initiative plans to achieve 70% localisation of all spending on goods and services and ensure 30% export of Saudi energy sector products by the next five years.
The joint ventures will be investing $6bn to $7bn to buy onshore rigs and offshore jackups all manufactured in the country by Saudi Aramco manufacturing joint ventures. The manufacturing joint ventures are currently being set up to support the initiative.
The joint ventures are expected to create around 5,000 jobs and achieve 80% localisation.
These joint ventures are scheduled to begin operation from the second quarter of 2017.
Under the onshore joint venture (JV), Nabors and Saudi Aramco's existing onshore drilling operations will be combined and will focus on future onshore oil and gas fields in Saudi Arabia.
It is estimated that initial contributions from both these will be more than $1bn, which also planned to build a significant number of newbuild rigs in the next ten years.
Similarly, the offshore JV will be amalgamating Rowan and Saudi Aramco’s existing offshore drilling operations in Saudi Arabia and cover the segments of the country's current and future offshore oil and gas fields.
Within this JV, it is estimated that the initial contributions will be more than $1.2bn from both partners. The offshore joint venture will acquire and operate newbuild jack-ups for the next ten years from a maritime complex.
