Saudi Aramco and McDermott International (NYSE:MDR) have entered an agreement where the latter will get a land lease for the long term at a maritime facility located in the Ras Al Khair region in Saudi Arabia. The construction and engineering firm that is based in the United States is eyeing the construction of offshore manufacturing facilities in the region.
Subsea and offshore markets
The offshore manufacturing facilities will consist of a marine and fabrication complex that will be built using the most advanced techniques as well as also being highly automated. It will also be built with the aim of being able to serve additional markets in the Middle East and the Caspian area. With the new facilities, McDermott will expand its capacity and capability in the area and be able to meet the needs of its clients in the subsea and offshore market segments.
“We are excited about this strategic move, and believe it expands and strengthens our ability to service all our growing Middle East markets and our decades-long leadership position with Saudi Aramco and in the Middle East,” the chief executive and president of McDermott, David Dickson, said.
McDermott’s Ras Al Khair fabrication facility is expected to offer a capacity of approximately 16 million man-hours compared to a capacity of 8 million hours offer by the existing McDermott facility located in Jebel Ali. In the next decade, the construction and engineering firm wants to move its operations to Ras Al Khair from Jebel Ali. McDermott did not, however, provide a figure of how much investment it is going to make in the area.
Job creation and economic diversification
The investment that McDermott will make in Ras Al Khair is the first among several planned in the area of as part of a move by Saudi Arabia to diversify the economy away from oil and create employment. Also, Saudi Arabia wants more of the equipment and machinery used in its oil industry manufactured domestically rather imported.
In Thursday’s trading session, shares of McDermott International edged up by 0.69% to close the day at $6.55 a share.
