Saudi Aramco signed a deal with National Oilwell Varco Inc. (NYSE: NOV) to form a joint venture (JV) to make onshore rigs and equipment in Saudi Arabia, the state-owned Saudi energy firm said.
Saudi Aramco will own 30% of the venture, while the rest will be owned by Houston-based NOV, the statement said.
Aramco President and CEO Amin Nasser said the deal was a step "towards the creation of a vibrant energy services sector."
Aramco, the world's biggest oil producing company which the Saudi government plans to list in the kingdom and abroad, has been seeking to expand its operations with new downstream and associated industry investments.
The new JV, which will be based in Ras Al-Khair, near the Jubail Industrial City on Saudi Arabia’s east coast, aims to produce 10 onshore rigs per year, Aramco said.
Commissioning of the facility is expected by 2020 with the first rig to be delivered in 2021, the company said.
Weatherford wrapped up the multimillion-dollar sale of its land drilling rigs across North Africa and the Middle East as the oilfield services company works on trimming its debt burden.
Aramco's discussions with Reliance were "serious," one source said. Another source said talks with Reliance were so far for a 25% stake worth up to $15 billion.
Schlumberger has spent billions of dollars to take over managing customers' oil fields, in some cases becoming an investor in the fields, while seeking to profit from increased oil production.