• 1 hour Weatherford Looks To Sell Assets To Ease Some Of $8B Debt
  • 2 hours OPEC Set To Move Fast On Cut Extension Decision
  • 5 hours Nigeria Makes First Step Away From Oil
  • 16 hours Russia Approves Profit-Based Oil Tax For 2019
  • 20 hours French Strike Disrupts Exxon And Total’s Oil Product Shipments
  • 22 hours Kurdistan’s Oil Exports Still Below Pre-Conflict Levels
  • 1 day Oil Production Cuts Taking A Toll On Russia’s Economy
  • 1 day Aramco In Talks With Chinese Petrochemical Producers
  • 1 day Federal Judge Grants Go-Ahead On Keystone XL Lawsuit
  • 1 day Maduro Names Chavez’ Cousin As Citgo Boss
  • 1 day Bidding Action Heats Up In UK’s Continental Shelf
  • 2 days Keystone Pipeline Restart Still Unknown
  • 2 days UK Offers North Sea Oil Producers Tax Relief To Boost Investment
  • 2 days Iraq Wants To Build Gas Pipeline To Kuwait In Blow To Shell
  • 2 days Trader Trafigura Raises Share Of Oil Purchases From State Firms
  • 2 days German Energy Group Uniper Rejects $9B Finnish Takeover Bid
  • 2 days Total Could Lose Big If It Pulls Out Of South Pars Deal
  • 2 days Dakota Watchdog Warns It Could Revoke Keystone XL Approval
  • 3 days Oil Prices Rise After API Reports Major Crude Draw
  • 3 days Citgo President And 5 VPs Arrested On Embezzlement Charges
  • 3 days Gazprom Speaks Out Against OPEC Production Cut Extension
  • 3 days Statoil Looks To Lighter Oil To Boost Profitability
  • 3 days Oil Billionaire Becomes Wind Energy’s Top Influencer
  • 3 days Transneft Warns Urals Oil Quality Reaching Critical Levels
  • 3 days Whitefish Energy Suspends Work In Puerto Rico
  • 3 days U.S. Authorities Arrest Two On Major Energy Corruption Scheme
  • 4 days Thanksgiving Gas Prices At 3-Year High
  • 4 days Iraq’s Giant Majnoon Oilfield Attracts Attention Of Supermajors
  • 4 days South Iraq Oil Exports Close To Record High To Offset Kirkuk Drop
  • 4 days Iraqi Forces Find Mass Graves In Oil Wells Near Kirkuk
  • 4 days Chevron Joint Venture Signs $1.7B Oil, Gas Deal In Nigeria
  • 4 days Iraq Steps In To Offset Falling Venezuela Oil Production
  • 4 days ConocoPhillips Sets Price Ceiling For New Projects
  • 7 days Shell Oil Trading Head Steps Down After 29 Years
  • 7 days Higher Oil Prices Reduce North American Oil Bankruptcies
  • 7 days Statoil To Boost Exploration Drilling Offshore Norway In 2018
  • 7 days $1.6 Billion Canadian-US Hydropower Project Approved
  • 7 days Venezuela Officially In Default
  • 7 days Iran Prepares To Export LNG To Boost Trade Relations
  • 7 days Keystone Pipeline Leaks 5,000 Barrels Into Farmland
Alt Text

Can The Gas Glut Kill The Permian Boom?

The natural gas glut is…

Alt Text

Bankrupt Venezuela Asks Partners For Free Oil

Following Venezuela’s official default last…

Alt Text

Oil Survives Bearish Backlash

Crude benchmarks posted steep losses…

Cyril Widdershoven

Cyril Widdershoven

Dr. Cyril Widdershoven is a long-time observer of the global energy market. Presently, he holds several advisory positions with international think tanks in the Middle…

More Info

Aramco Aims To Take Over The Offshore Rig Market

Aramco rig

After several years of discussing the possibility of setting up a new shipyard in Saudi Arabia, the Kingdom’s national oil company, Saudi Aramco, has entered into a new adventure. As one of the first NOCs, Aramco is diversifying its operations from upstream and downstream operations to become a major offshore services provider and operator. After decades of the hiring offshore rigs and vessels from third parties, such as Arabian Drilling Company, Aramco has now taken the step not only to own its own jack-up rigs but also to build them at a new shipyard in Ras Al Khair. Aramco has signed a joint-venture (JV) deal with UAE based engineering company Lamprell, Saudi national shipping company Bahri and Asian giant Hyundai Heavy Industries Company. As stated by Saudi officials, the yard will be the anchor project within the King Salman International Complex for Maritime Industries and Services located in Ras Al Khair, near the Jubail Industrial City on the Kingdom’s east coast.

The current plans entail the set-up of the Gulf’s largest integrated maritime yard, not only in production capacity and scale, but also in having Saudi Aramco as the main investor. This will present Aramco with the opportunity to design, construct and maintain around 20 jack-ups, while also having the capacity to support the manufacture, maintenance, repair and overhaul of offshore support vessels and commercial vessels. Taking into account that Saudi Arabia’s main shipping company Bahri is one of the partners, the yard is expected to also service very large crude carriers (VLCCs).

The original plans were put in place based on the assessment that the JV will offer Saudi Aramco a local provider for its offshore drilling and shipping activities. Cost optimization, reduced response times and higher agility is to be expected. Present capacity is slated to entail the construction of four offshore rigs, around 40 offshore vessels (including three VLCCs) and service of 260 maritime products per year. The first vessels and rigs are expected to be built from 2019 onwards, while full production capacity is projected to be reached in 2022. Related: Canada Pushes For Zero Emission Vehicle Strategy

Not mentioned in any of the current media reports is the fact that the Ras Al Khair yard, owned and paid for by Aramco, will not only be targeting local Saudi demand. The Ras Al Khair will be competing with existing yards in the GCC (UAE-Bahrain) and Asia. Looking at the current offshore rig market, this is a big gamble. Since the crude oil price crash, a long list of offshore rigs have been stacked while other projects have been put on hold. Commercial incentives for new builds are not easily found.

But the Ras Al Khair Yard is the new kid on the block, and it has lots of influence behind it. Aramco is the majority stakeholder, able to force other partners in the JV to comply to local demands and specifications. Looking at the offshore market at present, it could even be stated that Aramco will be able to force other yards out of business as it can demand that its co-investors build all new rigs in Saudi Arabia. With a list of 20 new builds already, Aramco’s pulling power is not to be ignored. Related: Has Permian Productivity Peaked?

If Aramco is able to construct and operate the new yard to the highest standards while also supporting the schooling of Saudi offshore rig engineers in the coming years, current rig builders will be in trouble. The localization drive, as linked to Saudi’s Vision 2030 and Aramco’s IKTVA, is a new influence that the market will need to get acquainted too. If Aramco succeeds here, other NOCs are sure to follow suit, leaving the traditional parties without any real options to survive the current onslaught. Offshore engineering companies, ship yards and rig providers will have to reassess their options. The traditional market structure may already be obsolete.

The $5.2 billion Ras Al Khair Yard project is a prime example of the ongoing changes within Saudi Aramco at present. The industry giant is going through dramatic changes, expanding beyond its NOC status and challenging on the international market. Aramco has entered the market with a bang, and markets should expect more big moves in the build up to what is being marketed as the biggest IPO in history.

By Cyril Widdershoven for Oilprice.com

More Top Reads From Oilprice.com:




Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News