May 31 (UPI) -- The Saudi Arabian Oil Co. said Wednesday it established a joint venture with international partners to support the offshore oil and gas sector.
The company known commonly as Saudi Aramco said it signed agreements with Emirati offshore rig company Lamprell, the National Shipping Company of Saudi Arabia and Hyundai Heavy Industries Co. to establish a joint partnership to build a maritime yard off the eastern coast of Saudi Arabia.
The official Saudi Press Agency, which carried the statement, said the maritime facility will be the largest of its kind in the region and facilitate the requirements needed for the offshore oil and gas production industry as well as the vessels that support that sector.
"Major production operations are expected to commence in 2019 with the facility reaching its full production capacity by 2022," the official news agency reported.
Lamprell in its statement on the deal said the joint venture gives it a "critical point of entry" into the Saudi Arabian energy market and opens up an opportunity to expand its global reach. At the start of the year, the company said the market recovery that followed a decision last year from the Organization of Petroleum Exporting Countries to curb production was welcome news, but 2017 was still panning out to yield "a particularly cautious environment."
According to Lamprell, the Saudi oil company agrees to purchase at least 20 drilling rigs and corresponding support vessels through the joint venture. Saudi Aramco will contribute as much as $350 million and the Saudi government will provide up to $3.5 billion of the total $5.2 billion to build the facility.
Lamprell Chief Executive Christopher McDonald said the deal is transformational in that it gives his company a significant competitive edge.
"Participation in the maritime yard also secures access to one of a limited number of companies globally that we believe will be receiving orders for and building new jackup drilling rigs in the near-to-medium term with significant component parts of the first two jackup drilling rigs expected to be subcontracted to Lamprell," he said in a statement.
The deal comes as Saudi Arabia leads in terms of production cuts organized under an agreement coordinated by the Organization of Petroleum Exporting Countries to balance the market with less output. Saudi delegates are in Russia, a party to the agreement, to coordinate on potential cooperation in the energy sector.