Rowan Companies plc and the Saudi Arabian Oil Company “Saudi Aramco” have signed, through their subsidiaries, an agreement to create a 50/50 joint venture to own, operate, and manage offshore drilling rigs in Saudi Arabia. The new joint venture company will use Rowan’s established business in Saudi Arabia as its base with a scope of operations covering Saudi Arabia’s existing and future offshore oil and gas fields. The new company is anticipated to commence operations in the second quarter of 2017. The new company will also manage the operations of five Rowan jack-up rigs currently in Saudi Arabia, until their associated drilling contracts expire, which then may be released, leased by or contributed to the new company thereafter. Rowan and Saudi Aramco have committed the new company to purchase future new build rigs that will be constructed in Saudi Arabia.
Both companies would contribute $25 million as working capital, Rowan said the rigs would receive contracts for an aggregate 15 years, renewed and re-priced every three years, provided that the rigs meet the technical and operational requirements of Saudi Aramco. The new company will uniquely position Rowan to partner in the growing Saudi Arabian offshore drilling market, and provide the company with a compelling long-term partnership with ARAMCO.
It is worth noting that, Nabors Industries Ltd. Announced end of October the signing of an agreement to form a new Joint Venture in the Kingdom of Saudi Arabia to own, manage and operate onshore drilling rigs. The Joint Venture, which will be equally owned by Saudi Aramco and Nabors, is anticipated to be formed and commence operations in the second quarter of 2017.
The Joint Venture will leverage Nabors’ established business in Saudi Arabia to begin operations, with a focus on Saudi Arabia’s existing and future onshore oil and gas fields. Saudi Aramco and Nabors will each contribute land rigs to the Joint Venture in the first years of operation along with capital commitments toward future onshore drilling rigs which will be manufactured in Saudi Arabia.
As part of its commitment to developing a competitive Saudi energy sector, Saudi Aramco has sought to localize industry hubs in order to foster economic diversification and job creation. This Joint Venture is one of the anchor projects that has grown out of this strategy which supports the wider development and localization of industries such as rig and rig equipment manufacturing and casting and forging.
