24/05/2017 13:29 AST
U.S. companies signed billions of dollars worth of deals with Saudi Arabia's oil and gas industry during President Donald Trump's visit to the Kingdom over the weekend, boosting bilateral business ties while the oil market continues to follow the shale-OPEC rivalry.
The US$110 billion worth of U.S.-Saudi defense capability deals made up for much of the value of the bilateral agreements during President Trump's visit, but Saudi Aramco also signed an estimated US$50 billion worth of deals with U.S. companies, many of which envisage investments in the digitalization of Aramco's business, offshore and onshore rig development, and oilfield services.
The flurry of U.S. deals with Aramco comes as the Saudi oil giant is preparing to launch what is expected to be the world's biggest IPO, in which Saudi Arabia plans to sell 5 percent of its national oil company, listing it on one or more international markets.
GE signed memorandums of understanding (MoU) and agreements worth a total of US$15 billion with Saudi companies, including an MoU with Aramco for a digital transformation of Aramco's operations with the goal of generating US$4 billion in annual productivity improvements. The two companies also agreed to examine the feasibility of new business developments across the energy value chain, including enablers covering upstream, midstream, and downstream oil and gas businesses, including the development of Oilfield Services and Equipment (OFSE) manufacturing hubs.
National Oilwell Varco entered into an MoU with Aramco to set up a joint venture in Saudi Arabia that would manufacture high-specification land rigs, rig and drilling equipment, and offer certain aftermarket services.
Aramco also entered into a non-binding MoU with drilling services provider Rowan to develop designs of jack-up rigs planned to be produced in Saudi Arabia. The MoU is a follow-up to the November 2016 agreement under which Rowan and Aramco agreed to create a 50/50 joint venture to own, operate, and manage offshore drilling rigs in Saudi Arabia.
Then, Aramco followed up on its MoU with Nabors from last year and updated it with an agreement to explore improving and optimizing land drilling supply logistics, services deployment, and rig moves for the Onshore Rig Ownership & Operations JV. Nabors Industries and Aramco agreed in October 2016 to set up a JV in Saudi Arabia that would own, manage, and operate onshore drilling rigs.
Engineering, procurement, construction and installation (EPCI) services contractor McDermott signed an MoU with Aramco to develop full-scale fabrication and marine facilities, and to move area operations to Saudi Arabia in a deal with a potential value of around US$2.8 billion.
In the oilfield services industry, Aramco signed MoUs with Halliburton, Weatherford, and Schlumberger to localize oilfield goods and services. Schlumberger said that its MoU with Aramco "strengthens the deployment of Schlumberger technology, reduces regional delivery times for key products and services, and increases local capacity and deployment capabilities."
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