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UPDATE 1-Saudi Aramco signs deal with foreign, local firms to build huge shipyard

shipyard@ (Adds details)

DUBAI, May 31 (Reuters) - Saudi Aramco said on Wednesday it had signed a joint venture agreement with three firms to build a shipyard on the kingdom's east coast, part of the government's drive to diversify the economy beyond oil.

A shareholder agreement was signed with National Shipping Co of Saudi Arabia (Bahri), a state-controlled firm which ships oil for Aramco, as well as London-listed Lamprell Plc , a United Arab Emirates-based engineering firm, and South Korea's Hyundai Heavy Industries Co.

Aramco, which announced a memorandum of understanding for the project with the three partners in January 2016, gave no financial details of the venture. It has previously said the project, at Ras Al Khair, will cost over 20 billion riyals ($5.3 billion).

Major production at the yard is expected to start in 2019 with the facility reaching full capacity by 2022.

It will be able to work on four offshore rigs and over 40 vessels including three very large crude carriers annually, Aramco said.

Pressured by low oil prices, Saudi Arabia is eager to create manufacturing jobs and produce domestically goods and services which have traditionally been imported.

U.S. oilfield services and equipment provider McDermott International has said it will build a fabrication yard at the Ras Al Khair complex and move some of its operations gradually from Dubai to Ras Al Khair by the mid-2020s. (Reporting by Andrew Torchia; editing by Jason Neely)