McDermott International has landed a major offshore project with Saudi Arabia, one of the few specified as geared toward oil. File photo by A.J. Sisco/UPI | License Photo
Nov. 10 (UPI) -- Vague on specifics, a contract for oilfield services company McDermott International is tied to boosting oil production for offshore Saudi Arabia.
McDermott in its release to the press said work would begin immediately for an unspecified Middle East customer for engineering, procurement, construction and installation services offshore in the Arabian Gulf.
"This award signifies our long-standing position and strong relationships with our Middle East customers," Linh Austin, a regional vice president, said in a statement.
The company offered few specifics other than to say it was a "major contract," which meant the value was somewhere between $750 million and $1.5 billion. Construction is slated at McDermott's facilities in Saudi Arabia and in Dubai, where it has its headquarters.
The announcement followed the $4.5 billion in agreements signed between the Saudi Arabian Oil Company, known informally as Saudi Aramco, and a handful of service contractors for "megaprojects" envisioned in the energy-rich kingdom. Saudi Aramco acknowledged Thursday that McDermott was awarded a three-year contract to help enhance crude oil production at the offshore Safaniyah field, though terms weren't disclosed.
While McDermott's contract was specific to crude oil production offshore, Aramco CEO Amin Nasser said the entire package of deals was part of an effort to push out more "clean-burning natural gas." The investment, he added, is part of the broader Vision 2030, which aims to bring more non-oil revenue to the Saudi economy.
The Safaniyah oil field is the largest offshore field in the world, producing more than 1.2 million barrels of oil per day. Bloomberg news this week reported that Saudi Arabia aims to cut exports by 120,000 barrels per day by December.
Saudi Arabia is leading efforts to stimulate crude oil prices with managed production cuts alongside other members of the Organization of Petroleum Exporting Countries. OPEC economists said Saudi production was around 9.9 million barrels per day last month, adding domestic oil demand in August "dipped steeply."
Rising crude oil prices have led to improved financials for companies like McDermott who cater to the exploration and production side of the industry. The company reported operating income for the third quarter at $127.1 million, compared with $43.1 million during the same period last year.