US oilfield services and equipment provider McDermott International said on Wednesday it would build a fabrication yard at a shipbuilding complex planned by national oil giant Saudi Aramco on the kingdom's east coast.
The two companies signed a memorandum of understanding for the first major manufacturing investment in the complex, which is part of Saudi Arabia's drive to diversify its economy and create jobs in an era of cheap oil.
Saudi officials have said the complex at Ras Al Khair will cost more than $5 billion to build. The kingdom wants to jump-start local manufacturing industries by making more equipment for its oil industry at home rather than importing it.
McDermott plans to build and outfit offshore oil and gas platforms at the new yard. A source familiar with the deal said the companies aimed to sign a final agreement by next year, with Aramco providing land for the project by the end of 2019.
The development of Ras Al Khair could eventually take business away from other maritime yards in the region, such as Dubai's Jebel Ali. McDermott said it expected to move business gradually from Jebel Ali to Ras Al Khair by the mid-2020s.
The US firm did not give a monetary value for its planned investment in Ras Al Khair but said its facility there would have up to 16 million man-hours of capacity, compared to 8 million man-hours at its current Jebel Ali facilities.
Last year, Saudi Aramco signed a memorandum of understanding for construction of the complex with National Shipping Co of Saudi Arabia, a state-controlled firm which ships oil for Aramco, as well as a subsidiary of London-listed Lamprell , a United Arab Emirates-based engineering firm, and South Korea's Hyundai Heavy Industries.For all the latest energy and oil news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.