Saudi Aramco says will invest $6-7bn through Nabor and Rowan joint ventures

State-owned oil giant Saudi Aramco has announced two new joint ventures with US-listed Nabors Industries and Rowan Companies focussing on onshore and offshore drilling in the kingdom.

Together they will invest $6-7bn to purchase onshore rigs and offshore jack-ups manufactured in Saudi Arabia by Aramco’s still to be formed manufacturing joint ventures.

Aramco said these ventures would create 5,000 jobs and aim for an 80 per cent Saudisation rate.

They are expected to begin operations in the second quarter of 2017.

The onshore venture with Nabor will combine the two companies’ existing onshore drilling operations in the kingdom and cover current and future onshore oil and gas fields.

It will initially own 15 contributed rigs, of which five will be from Aramco and 10 from Nabors, and manage the remaining Nabor-owned rigs in the kingdom bringing the total to 41.

“The total value of initial contributions from both partners through domestic operations, assets, equipment and capital is estimated at over $1bn,” Aramco said.

The venture has also committed to a significant order of new build rigs over the next 10 years from a local manufacturing joint venture.

The offshore venture with Rowan will combine the two company’s existing offshore drilling operations in the kingdom and cover current and future offshore oil and gas fields.

It will initially own seven contributed jack-up rigs, with two from Aramco and five from Rowan, and will manage an additional four Rowan-owned jack-ups in the kingdom.

Initial contributions from both partners are estimated at $1.2bn through domestic operations, assets, equipment and capital.

The venture has also committed to acquire and operate 10 new build jack-ups over the next 10 years from an in-kingdom maritime complex.

“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,” said Amin Nasser, Saudi Aramco president and CEO.

“These investments are part of a wider program 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.”

The plans come under Aramco’s iktva localisation initiative to boost diversification, job creation and workforce development in the kingdom.

It aims to achieve 70 per cent localisation of all spending on goods and services and enable 30 per cent export of Saudi energy sector products by 2021.