Wednesday 22 September 2021

Al Falih ... targeting 70 per cent localization

Aramco signs landmark JVs to boost local talent

DHAHRAN, December 15, 2016

State-run Saudi Aramco has signed deals to set up joint ventures with US-based Rowan Companies and Nabors Industries to own, manage, and operate drilling rigs in the kingdom in a bid to bolster its flagship localization initiative.

The Saudi oil giant also signed agreements and MOUs with Siemens to formalize the collaboration efforts on digitization and fuel treatment to reaffirm its commitment to its In-Kingdom Total Value Add (IKTVA) localization programme.

On the sidelines of the IKTVA Forum 2016 in Dhahran, Saudi Aramco also signed agreements in local manufacturing development with Jubail Energy Services Company (Jesco) and Arcelor Mittal Jubail for oil country tubular goods (OCTG), and a separate agreement with J-Power Systems Corporation Japan for submarine electrical cables.

Additionally, two agreements were signed with the National Maritime Academy and the National Aviation Academy to help further develop human capital in the Kingdom. The soft launch of the National Maritime Academy will accommodate 1,400 students while the full launch will target 2,000 students.

In addition, the National Aviation Academy will facilitate the sustainable growth of the Kingdom’s aviation sector through highly trained and qualified Saudi professionals while enabling a vibrant Saudi aviation industry. The soft launch will accommodate 400 students and the full launch will target 1400 students.

Khalid Al Falih, Minister of Energy, Industry, and Mineral Resources and chairman of Saudi Aramco, said in a keynote speech: “IKTVA represents a pioneering and model program, among other major programs which the Saudi Arabian government is working on to expand and diversify the economy, localize strategic industrial and economic sectors, and create jobs, in alignment with Saudi Vision 2030.”

Al Falih said that the localization of the Saudi economy by both the public and private sectors has reached 35 per cent in 2015 and is expected to reach 50 per cent by 2021, 59 per cent by 2025, and 70 per cent by 2030. “These ambitious targets will be pursued through an integrated program to encourage suppliers to procure their goods and services locally,” he said.

IKTVA is Saudi Aramco’s flagship localization initiative, designed to drive domestic value creation, with the aim of achieving 70 per cent localization of all spending on goods and services and enabling the export of 30 per cent of Saudi energy sector products by 2021.

In his keynote address, Saudi Aramco President and CEO Amin H Nasser said that while the current low oil price environment has posed challenges for the oil and gas industry, particularly for service providers and suppliers, a long term perspective is required and will ensure IKTVA succeeds.

“IKTVA can be part of the building blocks for a thriving and competitive world class Saudi energy sector as Saudi Aramco champions massive investments that will create new industries, which will need completely new localized supply chains,” he said.

Reflecting on the achievements that have been made since IKTVA was launched in December 2015, Nasser said, that overall, the share of local manufacturing has reached SR10 billion ($2.6 billion), or 43 per cent, which is an increase of 16 per cent from 2015 levels, the highest level of local content in the company’s history.

“We remain committed to procuring goods and services worth more than SR1 trillion over the next decade. Therefore, vast opportunities are there for all our suppliers by ensuring that 70 percent of those riyals are adding value in the Kingdom,” he said.

To-date, IKTVA has been embedded in over SR60 billion worth of contracts. Furthermore, Saudi Aramco has completed the “Third Party Certification” of the IKTVA baseline for the top 100 suppliers, which includes key metrics for local value creation.

During the Forum, Saudi Aramco awarded five supplier companies the “IKTVA Excellence Awards” in recognition of their steadfast commitment and significant contributions to the IKTVA goals and objectives.

The awardees included:

    Schlumberger for “Highest in Saudi Workforce”
    Arabian Pipes Company for “Highest in Localized Goods and Services”
    Arabian Drilling Company for “Best in Employee Recognition”
    General Electric Oil & Gas for “Best in Supplier Development”
    Halliburton for “Best in Training & Development” – TradeArabia News Service

Tags: aramco | Rowan | Localization |

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