Saudi Arabia as a regional manufacturing hub

Saudi Arabia

Gene Downey, CEO of Arabian Rig Manufacturing (ARM), and Etienne Lichaa, vice-president of ARM, talk to The Energy Year about the role the company plays in Saudi Arabia’s plans to become a regional manufacturing hub and its current production capacity. ARM manufactures complete land rigs, rig equipment and offshore drilling packages and provides aftermarket services.

What role does ARM play in Saudi Arabia’s ambition to become a regional manufacturing hub?
Gene DOWNEY: ARM is the anchor manufacturing project in Saudi Arabia. We’re introducing world-class manufacturing locally, in line with Saudi Arabia’s vision of fostering economic growth and creating jobs.
We combine NOV’s industry-leading technology and manufacturing expertise for land and offshore rig products with Saudi Aramco’s exploration and production capabilities. Our aim is to serve the wider Middle East and North Africa region by positioning the kingdom as a regional hub.
We are not limited to Saudi Arabia and Aramco’s requirements. A main focus of ours is to export and be competitive in the Middle East and North Africa. Ultimately any oil company will need competitive rigs with high KPIs and competitive prices. In the next couple of years, we will start exporting.

What is ARM’s current production capacity?
GD: Our current aim is to build 100 rigs in 10 years. We already delivered three rigs in Q1 2023, and we’re continuing to produce rigs and equipment accordingly. With ARM’s current capacity, we can simultaneously manufacture 10 land rigs per year along with offshore equipment.
ARM is therefore very well positioned to support the plan set by Saudi Aramco to increase production. We can put four to five different types of rigs on the rig pad at once and build 1500-hp, 2000-hp or 3000-hp rigs.
Through our multilateral partnership, we are executing the plan to build 50 rigs in the next 10 years for SANAD, the Saudi Aramco and Nabors JV, and another 50 rigs for multiple drilling contractors.
In terms of equipment portfolio and with a 500,000-square-metre fully integrated facility, ARM is currently the largest state-of-the-art rig manufacturing, drilling equipment and aftermarket service and repair facility in the world. The total investment exceeds USD 250 million. We are machining, fabricating and manufacturing. We are not just an assembly plant; we will be producing “Made in Saudi” products.

What is ARM’s value proposition for increasing rig performance?
Etienne LICHAA: Our rigs are designed with adaptability and reliability in mind to provide superior performance in even the most difficult and unpredictable drilling conditions. Our drilling rig portfolio features a variety of innovative designs focused on optimising drilling operations.
When you choose ARM, you’re backed by NOV, an industry leader with more than 170 years of rig and equipment design and manufacturing experience, coupled with Saudi Aramco, the largest energy company in the world.
We integrate NOV’s advanced technologies, such as NOVOS, the industry’s only reflexive drilling system which automates repetitive drilling activities and enables scalable control, monitoring and optimisation of operations across the rig fleet. This system allows drillers to focus on what is most important rather than on the manual and repetitive tasks.

What are the key steps for developing in-kingdom know-how and training?
GD: Highly qualified trainers and product champions play a pivotal role in know-how practice. If we produce a specific blowout preventer (BOP), we can bring NOV’s global BOP experts to train our ARM employees and increase the local BOP manufacturing capacity. Soon we will have BOPs, drawworks and mud pumps made in Saudi Arabia.
ARM is a member of the IKTVA [In-Kingdom Total Value Add] programme. We are working closely with multiple institutes, such as SADA [Saudi Arabian Drilling Academy], NITI [National Industrial Training Institute], SPSP [Saudi Petroleum Services Polytechnic] and several universities and vocational training institutes.
We’re working together to develop training programmes across multiple disciplines, including machining, electrical and mechanical engineering, pipe fitting, steel fabrication and HSE and quality assurance/quality control processes.
This knowledge transfer is key to maintaining competency and ensuring our competitive edge. We’re investing in our people, and that will eventually secure a safe return on investment. This is a critical part of our incorporation in Saudi Arabian industry and society.

How does the ongoing offshore rig reactivation affect the demand for your aftermarket services?
EL: Several drilling contractors are reactivating their offshore rigs and expanding their fleets through asset acquisition. Through our local field engineers and technicians, local project managers and maintenance technicians, who are supported by our training facility in Ras Al Khair, ARM is helping our clients prepare their rigs for operation as soon as possible to meet Aramco’s drilling plans.
We are increasing our local aftermarket services footprint. Our services include spare parts, field service, training and repair.

How do you collaborate with local shipyards?
GD: We have personnel working in local yards supporting rig owners to prepare their rigs for operations. We are also in negotiations with a major offshore service facility here in Saudi Arabia to provide rig equipment for offshore rig projects and to perform commissioning and other related services associated with those projects. We anticipate that the offshore sector will be a growth area and provide many more opportunities for collaboration.

How does localising rig-building capabilities affect the local manufacturing supply chain?
EL: A manufacturing facility such as ARM will naturally drive demand in the local supply chain. ARM plans to increase local manufacturing capabilities by developing multiple suppliers, such as fabricators, machine shops and supply houses, so they meet global industry standards such as ISO and API.
During previous local content conferences and exhibitions in the kingdom, we held presentations and workshops to highlight what is currently available and what will eventually be required locally. There are a lot of gaps to be bridged. In addition, we help local and international companies better understand the level of demand and identify business opportunities.

How can local steel manufacturing capabilities enhance the manufacturing sector’s capabilities?
GD: Historically, domestic manufacturing was affected by the lack of a local steel industry. There were no steel mills or casting or forging capacities in the kingdom. However, Vision 2030 transformed this problem into an opportunity and the development of casting, forging and steel mill facilities will be very beneficial to our business.
The availability of locally produced raw materials will increase our in-kingdom spending and reduce dependency on imported raw steel materials and the uncertainties around shipping times and freight and import costs.

How has Saudi Arabia’s business environment changed in the last couple of years?
EL: The Saudi leadership has encouraged local business development, specifically in the energy sector and domestic manufacturing. There is tremendous support from multiple entities and authorities, which is improving the ease of doing business in the kingdom.
Opening a company these days can be done online in some instances, increasing the trust of injecting capital as a foreign investor. New joint venture companies are arising with increasing frequency, and this is a strong indicator of business confidence levels. The magnitude of some of the enterprises indicates permanence and stability; they are not here-today-gone-tomorrow enterprises.

How will the incorporation of women in the workforce affect Saudi Arabia’s business competitiveness?
GD: ARM is an equal opportunity employer and, as such, we welcome women into our workforce and encourage them to apply for open roles. Our production facility’s remote location presented us with unique logistical challenges.
However, we are happy to report that after just one year of operation, we have more than 40 female employees. We are continuing to promote the recruitment of women, identifying new opportunities for them and expanding their roles in the workplace.
Currently, women hold positions in HR, HSE, QA/QC, administration and project management. We intend to expand the roles, open new opportunities and increase the number of female staff.
The enormous potential of the educated and entrepreneurial female population and their energy, talents and creativity will play a major role in boosting commerce and national development and turning the national vision into reality.

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