ARO Drilling, the 50:50 joint venture with the Saudi Aramco and the US’ Rowan Companies commenced operations on 17 October.

The company will own, operate and manage offshore drilling rigs in Saudi Arabia.

Rowan and Saudi Aramco contributed equal amounts of cash into the joint venture, after which ARO Drilling bought three jack-up drilling rigs from Rowan, and one jack-up drilling rig from Saudi Aramco. Following the purchase of these drilling rigs, ARO Drilling distributed excess cash of $88m to each to Rowan and Saudi Aramco and maintaining each party's 50 per cent ownership of the joint venture.

It is also planned for Saudi Aramco will sell an additional jack-up rig in 2017 to ARO Drilling and Rowan will sell an additional two jack-up rigs to ARO Drilling once they complete their current contracts in late 2018.

ARO Drilling also now manages the operations of Rowan's seven remaining jack-up rigs currently in Saudi Arabia. Rowan and Saudi Aramco have agreed that ARO Drilling will purchase twenty future newbuild rigs that will be constructed by a Saudi Aramco manufacturing joint venture and are expected to be delivered between 2021 and 2030. Each newbuild is expected to have a sixteen year drilling commitment upon delivery to ARO Drilling.

Rowan and Aramco announced plans for the joint venture in 2016.

Saudi Arabia is keen to develop its local supply chain to support its oil and gas industry as well as other sectors.

In December 2015, Aramco established a strategy known as the In-Kingdom Total Value Add (IKTVA) programme under which it is aiming to double the percentage of locally supplied materials and services in the energy sector to 70 per cent by 2021. The two other objectives of the programme are for the kingdom’s energy goods and services industry to export 30 per cent of its output by the same date, and for the energy sector to deliver 500,000 well-paid direct and indirect jobs for nationals. At the time of the programme launch, local content accounted for just 35 per cent of materials and services.

Historically, chemicals and drilling are the biggest areas of outlay for Aramco, and the national oil company estimates that drilling materials and services will account for 52 per cent of its $373bn 10-year capital investment programme, which equates to $66bn and $64.5bn respectively.