Saudi Aramco has signed a land lease agreement with McDermott, allowing the US-based company to establish a new facility to fabricate offshore oil platforms and large-scale industrial units.

The facility will be located in the $5bn King Salman International Complex for Maritime Industries in Ras al-Khair and will enhance McDermott’s “project execution capabilities”, according to a statement released by both parties.

McDermott will also expand its in-country engineering and procurement offices, as well as establish a new marine base in the Eastern Province to support installation of offshore platforms, subsea pipelines and cables, skids and associated structures.

“This facility will serve as a major engineering, procurement, construction and installation (EPCI) hub for not only the kingdom, but for the GCC region,” said Ahmad al-Saadi, Saudi Aramco's senior vice-president of technical services.

The new facility in Ras al-Khair will be located near Jubail Industrial City on the kingdom’s east coast and will cover an area of approximately 1,150,000 square metres.

The facility is expected to be operational by 2022.

The land lease agreement follows a memorandum of understanding (MOU) signed in March 2017.

The latest agreement comes amid a push by Aramco to increase the amount of locally produced energy-related goods and services procured within the kingdom.

By shifting the focus of the energy sector to local industries, Aramco aims to create hundreds of thousands of high-skilled jobs and long-term careers for Saudi citizens.

“Having this facility with International Maritime Industries (IMI) in the King Salman International Complex for Maritime Industries offers an integrated portfolio of maritime products and services,” said Mohammad al-Assaf, Saudi Aramco's vice-president of new business development.

He added: “The localisation of these capabilities will contribute to diversifying the economy, create almost 7,000 jobs, and achieve a target of 60 per cent Saudisation by 2030.”

Contractors working in Saudi Arabia are subject to the government’s In-Kingdom Total Value-Add (IKTVA) programme, which requires a minimum amount of goods and services for each scheme to be procured domestically.

The project forms part of Saudi Arabia’s Vision 2030 strategy to boost the contribution of the private sector and diversify the economy away from its reliance on oil.