Saudis To Open Oil Services To Private Investment

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Researched by Industrialinfo.com (Industrial Information Resources Incorporated; Houston, Texas). The Saudi Arabian ministry of petroleum is planning to set up a publicly owned company, which will provide support services to the petroleum and energy sector. The areas of activity covered will be engineering, seismic surveying, drilling, manufacturing of selected products and other services. The Saudi private sector would purchase a majority interest in the company and the government would participate using two existing oil service companies, the Arabian Drilling and the Arabian Geophysical and Surveying companies. The new company would have some similarities to the Saudi industrial monolith Saudi Basic Industries Corp and will draw an initial investment of up to $210 million.

Foreign companies are not allowed to invest in joint stock companies under Saudi corporate law, but they will be allowed to form joint ventures with subsidiaries of the holding company. The Saudis have recently stated that they wish to develop the existing strong ties with the USA and Texas in particular.

The government has been involved in a long term effort to spread oil generated wealth to a wider cross section of the population through outsourcing support services to the Saudi private sector. They are now looking at the possibility of privatizing Saudi Aramco's ancillary operations such as services in the medical, housing, transport and educational sectors. The company currently offers a wide range of staff benefits through its own service units.