The US-headquartered Rowan Companies is forming a joint venture with Saudi Arabia’s state-controlled oil and gas giant Saudi Aramco to own, operate and manage offshore drilling rigs in the kingdom.

Under the terms of the 50-50 JV agreement signed through the subsidiaries of the two companies, Rowan, a global provider of offshore contract drilling services, will contribute three jack-up rigs and Saudi Aramco will provide two when the new entity begins operations in the second quarter of 2017, according to a statement posted on Rowan website.

Rowan will contribute an additional two jack-up rigs as they complete their current Saudi Aramco contracts in late 2018. The new company will manage the operations of five Rowan jack-up rigs currently in Saudi Arabia, until their associated drilling contracts expire, which then may be released, leased by or contributed to the new company, the statement added.

Rowan and Saudi Aramco have committed the new company to purchase future new-build rigs that will be constructed in Saudi Arabia. The JV company will use Rowan’s existing business facilities in Saudi Arabia as its base with a scope of operations covering Saudi Arabia’s existing and future offshore oil and gas fields.

Aramco, the world’s biggest oil exporter which is targeting an initial public offering in 2018, and the US’ Nabors Industries also signed a an agreement in the first week of November to operate onshore drilling rigs.

The JV, equally owned by Aramco and Nabors, is also expected to be operational in the second quarter of 2017, according to a statement from the American firm at the time.

The new venture will leverage Nabors’ existing operations in Saudi Arabia, to focus on both existing and future onshore oil and gas fields. Aramco and Nabors will each contribute land rigs to the JV in the first years of operation along with capital commitments toward future onshore drilling rigs, which will be manufactured in Saudi Arabia.

These agreements are part of the kingdom’s commitment to developing a competitive energy sector, localise industry hubs to achieve Riyadh’s broader goals of economic diversification and job creation. The JVs will support the wider development and localisation of industries such as rig and rig equipment manufacturing, casting and forging.