KHOBAR, Saudi Arabia, Dec 15 (Reuters) - U.S.-listed Rowan Companies announced plans for its first rig from a new joint venture in Saudi Arabia and Nabors Industries said it is seeking to boost its manufacturing in the world’s largest oil exporter.
Rowan’s Chief Executive Thomas Burke told Reuters that its JV with state oil giant Saudi Aramco IPO-ARMO.SE will build two offshore rigs annually over 10 years, delivering the first in 2021.
The chief executive of Nabors Industries also announced it is seeking to boost its Saudi manufacturing operations, speaking on the sidelines of an event marking Nabors and Rowan signing separate contracts with Aramco to establish joint ventures to own, manage and operate drilling rigs.
Rowan currently has nine rigs in Saudi Arabia.
The 50/50 ventures, which will also lease rigs to Aramco, are part of the kingdom’s effort to make more of its own goods and support diversification away from hydrocarbon revenues.
The ventures will also facilitate Aramco’s plans to add more rigs to its operations as it increases activities to maintain oil production capacity and boost gas exploration and development.
Nabors’ joint venture will start operations in April next year with 46 onshore rigs, adding another 50 over the next 10 years, with CEO Anthony Petrello telling Reuters the kingdom offered a platform for growth.
There could also be cooperation between the two ventures, Petrello added.
“We do share some common equipment that Rowan will have and both of us will be looking to maximise the way the manufacturing will happen most effectively in the kingdom,” he said.
Currently, Aramco’s rigs in the kingdom are manufactured overseas but it hopes to repatriate some of that production under its In-Kingdom Total Value Add Program (IKTVA), which envisages doubling the percentage of locally-produced energy-related goods and services to 70 percent by 2021.
The Vision 2030 economic reform plan the government announced this year marks another attempt to diversify the economy away from oil, boosting the participation of the private sector and privatising state-owned companies.
Manufacturing locally will also save Aramco time on delivery, CEO Amin Nasser told Reuters, saving it money at a time when oil companies globally are seeking to reduce costs.
“The market is here, we are expanding so there is a lot of business,” he said.
On IKTVA’s website, Saudi Aramco said it expected to spend $119 billion between 2015 and 2025 on rigs and well services.
The IKTVA initiative and the signing of joint venture agreements would also help create a strong local supply chain, overcoming the historical challenge of procuring highly-engineered parts in Saudi Arabia, Burke added. (Reporting by Reem Shamseddine; Editing by Ruth Pitchford)