National Oilwell Varco (NOV) announced it has entered into a memorandum of understanding with Saudi Aramco to form a joint venture in Saudi Arabia. Through its manufacturing and fabrication facilities and drilling technologies, the joint venture will manufacture high-specification land rigs, rig and drilling equipment and offer certain aftermarket services. Additionally, the companies announced their proposed joint venture will establish a training center to develop Saudi technicians to maintain and operate the sophisticated drilling technology produced by the venture.
The joint venture will be supported by a commitment from the recently announced Saudi Aramco Nabors Drilling Company to purchase 50 onshore drilling rigs over a 10-year period. The joint venture will have the opportunity to supply, through an exclusivity agreement, Saudi Arabia, GCC and the MENA region. NOV will own a 70% interest in the joint venture, while Saudi Aramco will own 30%.
“We are excited to bring together NOV’s industry-leading technology, manufacturing expertise and rig products with Saudi Aramco’s E&P capabilities,” Clay Williams, NOV Chairman, President and CEO, said. “With the formation of this joint venture, we will be harmonizing two important goals: supporting Saudi Aramco’s supply chain integration initiative and strengthening NOV’s US-based, world-leading drilling technology franchise. This will create jobs and economic growth in both the Kingdom and in our operations around the globe, including the United States.”
The memorandum of understanding, which includes a detailed commercial term sheet, remains subject to final negotiation.