Saudi Aramco and Texas-based National Oilwell Varco (Nov) have signed a shareholder agreement to set up a manufacturing complex in Ras Al-Khair, Saudi Arabia.
A joint venture (JV) was created to manage the factory that will produce up to 10 onshore rigs per year, as well as drilling equipment, spare parts, packages for offshore jack-up rigs, and repair and recertification for Saudi Aramco machinery.
State-owned Saudi Aramco will own a 30% stake in the business. New York Stock Exchange-listed Nov is the majority shareholder with a 70% share.
The still-to-be-built factory will strengthen Saudi Arabia's manufacturing capabilities, helping to diversify the economy as part of the Vision 2030 strategy, and create temporary and permanent jobs.
Located near Jubail Industrial City on Saudi Arabia's eastern coast, the cost of building the factory was not disclosed.
In addition to creating jobs and increasing the level of locally-sourced goods and materials, Saudi Aramco's president and chief executive, Amin Nasser, said the complex would support "giga-projects" such as the King Salman International Complex for Maritime Industries and Services.
Manufacturing equipment will strengthen the portfolio of oil field services and products developed by the oil giant's subsidiary, Saudi Aramco Development Company.
Executive director of new business development at Saudi Aramco, and chief executive officer of the Saudi Aramco Development Company, Ziad Al-Murshed, said: "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 as joint ventures – one for onshore drilling and the other for offshore drilling.
"This joint venture with Nov is a major step toward localising oil field equipment manufacturing and aftermarket services, starting with rig manufacturing." he added.
Saudi Aramco's JV with Nov comes just days after the latter signed a memorandum of understanding with Abu Dhabi National Oil Company (ADNOC) and an Indian consortium to explore development of a $44bn (AED168bn) "mega refinery" in Ratnagiri, India.
The agreement saw the creation of a new company called Ratnagiri Refining and Petrochemical Company.