State oil giant Saudi Aramco said it has signed a shareholder agreement with US-based National Oilwell Varco (NOV) to set up an integrated world-class on-shore rig and equipment manufacturing and aftermarket facility at Ras Al Khair near the Jubail Industrial City on the kingdom’s east coast.

The new joint venture with NOV will serve as a major hub for high specification drilling rigs using cutting-edge technologies with a capacity to manufacture 10 onshore rigs per year, said a statement from Saudi Aramco.

Additionally, the facility will offer repair services and recertification of a large portfolio of equipment, it stated.

The facility will also have the capabilities to supply drilling packages for offshore Jack-up rigs. It will localise expertise in multiple disciplines related to on-shore rig manufacturing, and is expected to create over 1,000 direct and indirect jobs in the kingdom. Commissioning of the facility is expected by 2020 with the first rig to be delivered in 2021, it added.

As per the shareholder agreement, Saudi Aramco will own 30 per cent of the joint venture’s stake, while NOV, a leading American multinational corporation based in Houston, Texas, will hold the remaining 70 per cent shares.

Saudi Aramco’s President and CEO Amin Nasser said the efforts of the kingdom's leadership in accelerating economic diversification as part of Vision 2030 is having a significant impact in enabling the creation of new sub-sectors and also in attracting investments from our international partners to our nation’s vital oil and gas industry."

Saudi Aramco’s agreement with NOV today is a step in that direction towards the creation of a vibrant energy services sector which helps us to further advance our In-Kingdom Total Value Add program and expand the procurement of locally manufactured goods and services alongside the development of Giga Projects such as the King Salman International Complex for Maritime Industries and Services," stated Nasser.

Ziad Al Murshed, the executive director of New Business Development at Saudi Aramco, and CEO of Saudi Aramco Development Company, said: "The new manufacturing facility will further strengthen the integrated portfolio of oil field services and equipment being developed by the Saudi Aramco Development Company, which also optimises Saudi Aramco’s supply chain costs and improves its agility. This investment will also create employment and training opportunities for Saudi youth."

"Over the past few years, Saudi Aramco has taken major steps to localise oil field 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," explained Al Murshed.

"This joint venture with NOV is a major step toward localizing oil field equipment manufacturing and after-market services, starting with rig manufacturing," he added.-TradeArabia News Service