KHOBAR, Saudi Arabia Dec 15 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
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
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
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,
"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)