Saudi Arabia is in advanced discussions with the US government about buying two frigates based on a coastal warship that Lockheed Martin Corp is building for the US Navy.

Saudi Arabia is in advanced discussions with the US government about buying two frigates based on a coastal warship that Lockheed Martin Corp is building for the US Navy.

The agreement could be reached by the end of the year, according to sources familiar with the talks.

The frigate sale, valued at well over $1 billion, will be the cornerstone of a long-delayed multi billion dollar modernization of the Royal Saudi Navy’s Gulf-patrolling eastern fleet of aging US warships and would include smaller patrol boats. It underscores the strong business and military ties between the two countries, despite tensions over Iran nuclear deal.

Paperwork for the Saudi deal could be finalized by year's end, the sources told Reuters this week. The larger modernization effort will encompass training, infrastructure and anti-submarine warfare equipment, and could include orders from other countries, the sources said.

Saudi Arabia's King Salman is due to meet with US President Barack Obama in Washington this week, as Washington and Riyadh seek to shore up relations.
The Saudi Naval Expansion Program II has been under discussion for years, but US sources say Saudi Arabia's concerns about Iran have accelerated the effort.

"We’re not seeing that any strains in the U.S.–Saudi government to government relationship are inhibiting the business relationships," said one source.

"The Saudis remain very interested in buying US technology."
Saudi and US officials are also finalizing details of a deal worth $1.9 billion to buy 10 MH-60R helicopters, which can be used for anti-submarine warfare and other missions. US lawmakers were notified of a deal in May.

The helicopters are built by Sikorsky Aircraft, a unit of United Technologies Corp and Lockheed, which is poised to take over Sikorsky by year-end.
In June, Sikorsky said Saudi Arabia was looking at an additional large order of Black Hawk helicopters as it moves to double its current fleet of 80.

Saudi Arabia is also beefing up its missile and air defenses. The Gulf country already has the Raytheon Co Patriot missile and air defense system, and was recently cleared to receive $5.4 billion in new PAC-3 missiles built by Lockheed.