- Thought Leadership
State of the art Kingdom rigs for Saudi Arabia
Mohamed Hegazi, CEO of ARO Drilling, talks to The Energy Year about ambitious expansion plans for the company’s fleet of Kingdom rigs and reducing the environmental footprint of rig deployments. ARO Drilling is a joint venture between Aramco and Valaris that owns and operates a fleet of high-specification rigs in Saudi Arabia.
Mohamed Hegazi
Chief Executive Officer
How do your new locally manufactured rigs, Kingdom 1 and Kingdom 2, enhance ARO Drilling’s offerings, and what impact will they have on the offshore drilling market in Saudi Arabia?
Kingdom rigs will gradually replace retiring units within our fleet and offer more automation, better versatility, lower energy consumption and a reduced carbon footprint. They also offer the latest instrumentation, enabling us to collect more data for operational optimisation, an area in which drilling lags behind sectors such as aviation. We are investing in connectivity to ensure we are data-ready, and we intend to use data to improve the safety, efficiency and reliability of our operations.
We have already taken delivery of two Kingdom rigs and there are 18 more to go. This requires significant infrastructure and a comprehensive and complete supply chain, but more importantly, it requires post-construction services. We want to have such services here in Saudi Arabia. We don’t want to fly people halfway around the world to perform a service or provide support.
Building rigs locally creates a massive supply chain ecosystem, from vendors to subcontractors, which helps develop new sectors and job opportunities in Saudi Arabia. We are working with local companies to build up the infrastructure needed for servicing these rigs in-country. This is especially important because the market for high-quality rigs will keep growing in the future, and local services will be critical to sustaining that growth.
Recently, our contracted rig builder, International Maritime Industries, kicked off the early stages of the next construction phase in the Kingdom programme, including several vendor awards.
As previously announced, our commitment is to build 20 rigs over the span of just over a decade. Two Kingdom rigs have already been delivered and are operating safely and efficiently for Aramco. We aim to gradually populate the ARO fleet with Kingdom rigs and, as the shipyard goes through its learning curve, we expect the process to be streamlined and become more efficient with shorter build times.
Do you have a reliable domestic supply chain in place, or are you seeking partners to reinforce it?
We have been working hard to convince the major companies we already work with to bring their operations to Saudi Arabia. Many well-known names in rig construction and services have already come, and we continue to push for others to follow.
What features make the Kingdom rigs ideal for work in Saudi Arabia?
The environment here in the Gulf is relatively benign, which means our rigs don’t need to withstand the extreme conditions that rigs in harsher environments such as the North Sea or Gulf of Mexico face. However, rigs in Saudi Arabia still work very hard. They need to be agile and flexible and be able to move and adapt easily. Essentially, Saudi rigs need to be more versatile than most and deliver greater operational flexibility while complying with Aramco’s stringent safety requirements.
Is the investment for these rigs coming solely from ARO Drilling?
This is a multi-billion-dollar commitment spanning over a decade. We’re partnering with financial institutions to secure competitive funding. The key is that it’s easier for banks to lend when there are agreements in place to contract the rigs long-term upon delivery with a company like Aramco. Such commitments make the investment more attractive to lenders.
The offshore drilling market is very competitive. How does ARO Drilling position itself to compete for market share?
The fact that we are a joint venture between Aramco and Valaris gives us a somewhat favourable position. However, it’s a position we need to earn and maintain through strong safety and operational performance.
What sets us apart from many other drilling contractors is our long-term perspective. We have 18 rigs being built, with the last delivery scheduled in the mid-2030s. There are agreements in place, meaning that Aramco has committed to deploying them for many years.
Long-term planning gives us a significant advantage. While most drilling contractors are happy with visibility through a couple of years, we have a minimum of 16 years of guaranteed backlog for each of these 20 rigs, which is both substantial and unique.
In 2023, one of your rigs was named the best rig in the country by Aramco. How did you accomplish this, and what does the recognition mean for ARO Drilling?
It’s certainly not an easy achievement. Aramco evaluates many criteria, with safety being one of the most important. Maintaining a clean safety record and demonstrating leadership in safety awareness is critical. They also focus on the rate of performance improvement for the rig.
There were more than 80 rigs in Aramco’s fleet at the time, so winning the award was huge for us. We’re proud to have stood out in such a competitive field, and it reflects the dedication and hard work of our team, for which I am very grateful.
Aramco aims to achieve net zero emissions by 2050. How is ARO Drilling helping to reach this target, and are you incorporating any new technologies to support broader sustainability goals?
We are pursuing sustainability through what we currently have and what we are developing. For our existing rigs, we are assessing where our emissions come from and identifying areas where we can invest to make a tangible reduction.
One of the areas for improvement is rig moves between operating locations, which consume a significant amount of energy. We are studying ways to optimise them and looking at upgrading our machinery. For our new rigs, Kingdom 1 and 2, we are incorporating more electrical power, and using instrumentation to gather data.
Looking ahead to future Kingdom rigs, we plan to advance the design by incorporating newer technologies. Our goal is to build rigs that not only meet the highest standards but also safely push the boundaries of what’s possible in the offshore industry. We want to stay ahead of the curve, even as the industry evolves globally.
How is ARO Drilling training its workforce, and what role do partnerships play in this?
In the past, we onboarded our personnel by having them shadow experienced team members. However, we’re now taking a more proactive approach. We have signed MOUs with international companies to provide our workforce with global exposure. International experience is important because it broadens perspectives and helps our employees understand the best practices from different regions.
Not every local practice is the absolute best, and not every international practice is, either. Combining the best of both worlds is how we improve. In addition, we’re collaborating more closely with our colleagues in the drilling contractor segment by sharing knowledge and learning from each other. These collaborations enhance the skills and knowledge of our teams and help us meet the highest standards in the industry.
Is ARO Drilling planning to expand its operations outside of Saudi Arabia, and if so, what markets are you considering?
We would love to. For the past few years, our focus has been on making the Kingdom rigs operational, especially Kingdom 1 and Kingdom 2. Now that they are up and running, we plan to start looking at expanding internationally, or at least regionally. Our initial goal is to take our fleet to other markets in the GCC and explore possibilities outside the region over time.
How do you envision ARO Drilling improving its market share and operational capabilities, in the context of Vision 2030?
Having big targets for 2030 and 2050 is important, but the reality is that nothing drastic happens at the stroke of midnight on December 31 of any year. What matters is the journey towards those goals. ARO Drilling is fortunate to have something that few offshore drilling contractors have, which is a stable and committed outlook. Consistency is key.
This gives us a different perspective and allows a different forward strategy. Our focus right now is on making our operations as safe and efficient as possible, particularly with the Kingdom rigs construction project, which is critical to us. We have negotiated attractive terms, and we’re committed to the build.
Looking to the future, ARO Drilling will keep focusing on modernisation, automation and utilising data and fit-for-purpose AI to drive innovation. Our aim is not just to serve the domestic market, but to lead the industry as a unique company constructing and operating the best new builds, globally.
No matter what twists and turns markets bring, we have a steady, stable and sustainable vision towards our future.
