4:11 AM, May 22, 2017 — U.S. firm Honeywell (HON) was among a slew of companies that signed deals with state-owned oil giant Saudi Aramco and other firms and entities in the Kingdom at the weekend worth tens of billions of dollars as Donald Trump made his first overseas foray as the U.S. president.
In a deal announced on Saturday, Saudi Aramco signed a memorandum of understanding with Honeywell as part of Aramco’s In-Kingdom Total Value Add (IKTVA) program for an estimated $3.6 billion.
The kingdom is looking to increase its domestic market by adding a complete value chain – including creating a manufacturing center.
Aramco plans to reach 70% localization in all spending while exporting 30% of the country’s energy sector products by 2021.
General Electric (GE) signed deals worth $15 billion for services and equipment, while Jacobs Engineering (JEC) will form a joint venture with Aramco to manage business projects in the kingdom, and McDermott International (MDR) will transfer some of its ship fabrication facilities from Dubai to a new shipbuilding complex planned by Aramco in a deal estimated at $2.8 billion.
Dow Chemical (DOW) signed an agreement to build a manufacturing facility to produce polymers for coatings and water treatment applications. It also agreed to a feasibility study on proposed investment in performance silicones. Petrochemicals are a key growth area for Gulf oil producers like Saudi Arabia to increase high-end value products to meet demand from Asia.
Weatherford (WFT) signed an agreement for potential projects worth $2 billion to localize oilfield goods and services.
An extension was signed for Weatherford’s joint venture with Nabors (NBR) to see additional well services and studies into rig movements involving an investment of $9 billion over 10 years as well, a $7 billion investment over 10 years with Rowan Companies (RDC) to own and operate offshore drilling rigs.
On the defense side, Saudi Arabia discussed building a domestic arms industry instead of big ticket imports as has been the case in the past and Lockheed Martin (LMT) said to that end it would support the final assembly and completion of an estimated 150 S-70 Black Hawk utility helicopters in Saudi Arabia.
Lockheed Martin said Saudi Arabia expressed its intent to procure more than $28 billion worth of the company’s integrated air and missile defense, combat ship, tactical aircraft and rotary wing technologies and programs.
Meanwhile, Raytheon Company (RTN) said it and Saudi Arabia Military Industries Company signed a memorandum of understanding to cooperate on defense-related projects and technology development.
Meanwhile U.S. Secretary of State Rex Tillerson said on Saturday that deals worth $350 billion have been signed between U.S. companies and Saudi Arabia during the president’s first day in Riyadh.
He added brief comments on the Iranian presidential election by saying he newly-elected Iranian President Hassan Rouhani will use his second term in office to end Tehran’s ballistic missile program and end what he called its network of terrorism.
“I’m not going to comment on my expectation. But we hope that if Rouhani wanted to change Iran’s relationship with the rest of the world those are the things that he could do,” Tillerson said.