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Saudi Aramco has closed a joint venture deal with U.S. National Oilwell Varco for the construction of a rig and equipment manufacturing facility in Saudi Arabia, media report, adding the Saudi state oil giant will be a minority shareholder with 30 percent and the U.S. company will hold the other 70 percent in the venture.
The chief executive of Aramco said the venture will advance the creation of an oil industry services sector in the Kingdom and stimulate trade with locally produced goods and services. It is part of efforts by Riyadh to diversify its economy away from its near-total reliance on oil for export revenues.
“The kingdom leadership’s efforts to accelerate economic diversification as part of Vision 2030 is having a significant impact in enabling the creation of new sub-sectors and also in attracting investments from our international partners to our nation’s vital oil and gas industry," Amin Naser, Aramco CEO, said.
Oil industry services is one direction that this diversification is going into, and refining and petrochemicals is another. Aramco has committed tens of billions of dollars in investments in refining and petrochemical production projects abroad in a bid to both secure long-term demand for its crude and reduce its dependence on crude oil exports only.
Related: The Saudis Won’t Prevent The Next Oil Shock
The new Aramco/NOV venture will aim to produce 10 drilling rigs annually, Aramco said. The facility will be completed in 2020 and the first rig should be delivered in 2021.
In a statement on the joint venture, National Oil Varco said the new entity will receive financial support from a commitment by Saudi Aramco Nabors Drilling Company to buy 50 onshore drilling rigs from the U.S. rig-building company.
Earlier this month, National Oilwell Varco expanded its European presence with the acquisition of Dutch-based offshore rig design firm GustoMSC to strengthen its offshore rig portfolio.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.