A vigorous entry into the Saudi rig manufacturing space

Saudi Arabia

Gene Downey, CEO of Arabian Rig Manufacturing (ARM), and Billy Arnold, vice-president of business development and sales, talk to The Energy Year about successfully establishing domestic manufacturing capabilities for sophisticated oilfield equipment and the importance of the “Saudi Made” logo when doing business in the GCC and beyond. ARM is a 70-30 joint venture between NOV and Saudi Aramco that manufactures land rigs, rig equipment and offshore drilling packages.

Given Arabian Rig Manufacturing’s role in Saudi Aramco’s expansion plans, how do you expect production to evolve in the next few years, and what is your strategy for capturing market share?
Billy ARNOLD: The market is going to be influenced by geopolitical factors and the changes in the US administration. It’s difficult to make predictions, but base demand remains steady globally. We expect to see fluctuations in rig counts and demand for the components that go into producing barrels of oil, but I think the market will remain relatively flat in 2025. For us, a flat market is quite healthy – even if it is not growing, it’s steady.
Our spare parts business may feel more of an impact, especially consumables that are tied to drilling activity. When rig counts go down – as we saw last year and may see this year – it can affect the demand for those consumables.
However, ARM is focused on maintaining the production schedule for the rigs we are building for our partners. Aramco has been very supportive in helping us stay on track. So far, we have delivered 10 of the 50 rigs we have on order, and we plan to continue delivering according to our publicly announced schedule. Our goal is to keep delivering on time, which is in line with our commitments when we established ARM in 2018.
However, we also want to expand our business beyond the rigs we are building. For example, in Q4 2024, we signed a contract to build the first jackup for our neighbour, International Maritime Industries (IMI). This is an exciting development for IMI and the Ras Al Khair ecosystem, and it reflects the ongoing growth of the industry there.
There’s a great story here about two companies that were early movers to Ras Al Khair when it was just a remote region, and that are now working together in its value chain. It’s a testament to Vision 2030 and the strength of the investments made in Ras Al Khair, which is starting to thrive despite its isolation.

What strategies is ARM implementing to strengthen and localise its supply chain, and how are you planning to collaborate with local fabricators to meet quality assurance standards?
Gene DOWNEY: Overall, we see the most demand for electrical cable, electric motors, high-pressure pipes, and construction materials such as steel. A lot of these elements are not readily available here, so we continue to rely on the suppliers we’ve been working with for years.
However, I know that a steel mill is being developed in Saudi Arabia, and that could significantly boost our localisation efforts. It may also help us financially, as it could reduce our costs for importing materials, which also include customs duties and taxes. We are looking at Saudi Arabia’s overall industrialisation plan to see how we could streamline our processes.
We have a plan to grow our local fabrication capabilities. We are working to familiarise companies with our quality standards, ensuring that everything, from the raw materials to the finished product, meets our rigorous expectations. This requires close oversight. We have learned that you don’t always get the results you expect if you don’t embed your people in your subcontractors’ facilities.
We have had instances where we received materials that needed major rework, with the subsequent impact on our costs and schedules. If we pursue localisation and help improve our suppliers’ capabilities, we can avoid such issues and create a more reliable and cost-effective supply chain.

What differentiates ARM from other manufacturers, and how are you navigating Saudi Arabia’s competitive markets as a relatively new company?
GD: ARM may be a new venture, but our parent companies have more than 200 years of combined experience in the oil and gas industry. The knowledge and expertise accumulated over the years through mergers and acquisitions and the integration of teams, plants and technologies are now available to ARM if and as required. We have several team members from this established environment who have been seconded to ARM to help manage our facilities and business.
Our advantage lies in leveraging both the old and new technologies of our parent companies. Robotics and automation have significant potential, and we are already working on incorporating them into our rigs to achieve greater safety and better performance.
One of the key benefits of robotics is that it reduces reliance on human intelligence and endurance, which helps improve safety and efficiency. Robots don’t need a day off, and they can work in extreme conditions without risk or complaint. We are already trialling robotics and automation on some of our rigs, and there is plenty of room for growth. We believe our emphasis on innovation sets us apart from our competitors.

BA: ARM is unique in that, while we are a relatively small business with only around 700 employees, we likely have the largest R&D budget among our industry peers because we can leverage the extensive resources of our parent companies. We are also deploying technology in Saudi Arabia that NOV has tested, vetted and refined across the globe. This gives us a significant advantage, as we get a lot of feedback from our customers, especially through field trials, which help us fine-tune and harden our technologies.
The Saudi operational environment requires new technologies, but there is a natural hesitation in the domestic industry to adopt unproven solutions. With our backing and the proven success of our technologies worldwide, we can bridge the confidence gap.

Given the complexity of rig manufacturing, how does ARM balance automation with skilled human oversight and intervention?
GD: A lot of what we do in manufacturing drilling rigs doesn’t lend itself well to automated lines, such as in automobile manufacturing. Many of our parts are one-off, customised pieces made from special materials in unique shapes. For drill pipes, we can set up a robotic welding line that requires minimal human involvement, but when it comes to manufacturing rigs, I’d say 90% of the process requires hands-on attention.
In many cases, a robot cannot perform the work as well as skilled workers because the technology is limited by the parameters it can work within. Although we have implemented robotic systems for tasks such as welding and cutting, we still rely heavily on human expertise. Most of what we build has to be tuned, programmed and carefully monitored, so people remain essential to the process.

In the next five years, the demand for oil rigs is expected to increase by about 18%. Are you planning to increase your production capacity to meet this growth?
GD: Currently, we can manufacture five rigs annually, but the facility infrastructure can support production of 10 rigs per year. Additionally, we have a 100,000-square-meter expansion zone within our facility’s boundaries. We can scale up production from five to 10 rigs with very little infrastructure enhancement, but the growth will require additional skilled employees and a stronger local supply base, especially fabrication shops that can deliver quality products on time, every time. But we will ramp up accordingly if and when we get the orders.

BA: To clarify, our facility is the most advanced and complete manufacturing facility in NOV’s entire portfolio. If we need to expand, the space is available; our main constraint is human capital. We have to ensure we have the right workforce in place. The capabilities of our facility are world-class in terms of lead and turnaround time, and we can certainly meet demand increases. Equally as important, we also have our spare parts warehouse in the 2nd Industrial City in Dammam, along with in-kingdom service support. This is a unique, comprehensive in-kingdom cradle-to-grave operation.

What’s ARM’s strategy to grow its client portfolio outside Saudi Arabia and the GCC, and how do you plan to compete in international markets?
BA: Net exporting is a goal not just for us but for the entire industry. It’s also a priority for Aramco and NOV. The target has been part of our vision since the company was founded. However, to perform well in export markets, you need to be commercially competitive. You also need a highly competitive manufacturing process, because pricing pressures are significant in international markets.
One of the biggest challenges we face is that manufacturing drilling rigs in Saudi Arabia is not a low-cost venture compared to other countries. The cost of labour here is higher, and efficiency is still improving as we train the domestic workforce. We also do not have the advantage of operating from within a special economic zone at the moment, which would help the economics in export trade. That makes it difficult to compete on the global stage. Our current objectives are to refine our manufacturing process, improve efficiency, and optimise the costs of our Saudi operations.
Once costs have been optimised, we will target regional markets where we can compete effectively, promoting our technology, high-quality rig equipment and drilling packages. The key advantage we have is our time to market. Since we manufacture domestically, we can offer shorter lead times and logistical benefits for clients in the GCC and nearby regions. Our goal is to build on those strengths while continuing to improve our cost structure. Once we are competitive on that front, we will push further into other export markets.

How important is the “Saudi Made” logo for ARM, and do you believe it benefits the company’s global reputation?
GD: The first time we put the “Saudi Made” logo on our equipment – our BOPs [blowout preventers] and the masts and substructures for our rigs, for example – it was a major milestone for ARM. It was meaningful because it represented a shift in perception and highlighted the capabilities of Saudi manufacturing.
Currently, the logo’s recognition is mainly within Saudi Arabia, but as we expand into the GCC and eventually other regions, it will become more widely acclaimed. The goal is to make it a symbol of quality and reliability on a global scale.

BA: Having the “Saudi Made” brand is a priority, particularly with Vision 2030 pushing Saudi Arabia to become a regional manufacturing hub. As the global recognition of Saudi manufacturing grows, it will help us and other stakeholders gain credibility in international markets. We see it as a valuable opportunity for ARM to be part of the evolving global supply chain, especially as Saudi capabilities continue to mature.

What lessons has ARM learned in its first years in operation, and how do you see the company evolving in the coming years?
BA: Hopefully, in five years, we will have moved past the initial hard lessons, and we will be focused on optimising and driving efficiency across the business. We are always learning and striving to get better, but the biggest hurdles – such as setting up our facility with no power from the grid for the first year – are behind us.
We delivered our first six rigs using diesel generators, which was quite a challenge. We finally got power from the grid at the beginning of 2024.

ARM received the Best in Overall IKTVA (Manufacturing) award at the IKTVA Forum & Exhibition 2025. What were the key factors behind this recognition, and what does it mean for ARM’s position in Saudi Arabia and internationally?
GD: We were incredibly grateful to receive the award. It is a recognition of the hard work we have put into building a workforce and establishing a facility of this calibre in Saudi Arabia. Starting from bare ground a few short years ago, we built our facility and are now delivering quality rigs and equipment on time while maintaining the highest standards. This is a significant accomplishment and a tribute to our workforce.
This recognition includes the fact that what we are doing in Ras Al Khair – manufacturing equipment such as BOPs, complete masts, substructures, and more – is truly a first for Saudi Arabia. These are items that have traditionally been imported and are now being produced domestically to the exacting standards of the oil and gas industry.
It is exciting for all of us that we have developed this capability in-kingdom. This award recognises the ARM’s workforce; the dedication and hard work of our employees is something we are especially proud of. The award also reinforces our company’s position in Saudi Arabia and internationally, by demonstrating that we are capable of meeting the highest global standards in oil and gas manufacturing.

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