ARO Drilling hit by suspension for one of its contracted jack up rigs with Aramco

Joint venture company ARO Drilling announced on Friday that it has received a notice of suspension from Saudi Aramco for one of its 19 contracted rigs. The contract for jackup EXL I was previously scheduled to end in December 2024.

ARO Drilling, which has its headquarters in Al Khobar, reported on Thursday a suspension notice for a period of up to 12 months.

“The company is in discussions with Aramco to determine the effective date of the suspension,” it stated. “During the suspension period, ARO will have the right to terminate the drilling contract with Aramco.”

Promising joint venture

ARO Drilling describes itself as a world-class offshore drilling contractor that owns, operates, and manages a fleet of high-specification and premium jack-up rigs in Saudi Arabia.

ARO Drilling (Saudi Aramco Rowan Offshore Drilling Company) is a joint venture between Saudi Aramco and Valaris Companies, a New York-listed drilling contractor.

ARO Drilling previously said the 50/50 joint venture marked “a major milestone towards the development of a competitive Saudi energy sector”, as encapsulated in Saudi Aramco’s In-Kingdom Total Value Add (iktva) programme and Saudi Vision 2030.

ARO leases EXL I (VALARIS 143) from Valaris under a bareboat charter agreement.

Historic ties

Saudi Aramco and Valaris Companies have worked together continuously in the KSA market since 2006, a “strengthened partnership” ARO had suggested would ensure increased collaboration between the partners, “increased efficiency of drilling operations, improved localisation of the drilling industry in Saudi Arabia, and best-in-class drilling performance”.

Also on its website, ARO Drilling had noted how the offshore drilling market in Saudi Arabia was expected to expand, “creating considerable demand for drilling services”.

It went on to state: “We are committed to purchasing up to 20 new-build jack-up rigs over 10 years, taking delivery of the first rig as early as 2023, in order to meet Saudi Aramco’s offshore drilling requirements in the kingdom.”

However, the current overall jackup market is viewed as very tight.

The EXL I suspension adds to 17 rigs reportedly suspended by Aramco to date as the energy giant looks to maintain productive capacity at 12 MMbpd following a March announcement of plans to reduce capital investment by about $40 billion between 2024 and 2028.