Saudi Aramco is encouraging foreign oil and gas supply firms to set up shop in Saudi Arabia as the kingdom looks to create more jobs and further diversify its industrial base.
The state-owned company is hoping to entice suppliers, including Siemens and Schlumberger, to set up local facilities in Saudi Arabia in a bid to strengthen the oil rich kingdom’s manufacturing sector.
In a recent speech, Saudi Aramco CEO Amin Nasser said Aracmo plans to spend about $300 billion on goods and services over the next decade, with most of those purchase being made from local suppliers.
Saudi Aramco hopes that about 70 percent of its goods and services will be locally sourced by 2021, a plan that will also boost the export of Saudi-made energy goods and services to 30 percent over the same timeframe.
The effort is part of the company’s In-Kingdom Total Value Add (IKTVA) program, designed to increase investment, economic diversification, job creation and workforce development in Saudi Arabia.
“Companies that build a deep and lasting relationship with the kingdom by setting up shop here and investing in workforce development will capture the major share of Saudi Aramco’s spend on materials and services,” Nasser said.
Nasser said that he hopes the drive for more local content will create hundreds of thousands of jobs in the kingdom.
“We want this thriving [energy] sector to deliver half a million well-paid direct and indirect jobs for talented Saudis over the long term,” Nasser said.
The IKTVA contains mandatory local content rules for the development of suppliers and contractors that will prioritize the purchase of goods and services from a local supplier base.
Nasser said the IKTVA program will “provide a level playing field for domestic and international suppliers though greater consistency and increased transparency in application and process.”
The program will first establish a three-year baseline score for each supplier measured against key metrics for local content and value creation.
After this, Saudi Aramco and each supplier will jointly develop an IKTVA action plan to increase the respective IKTVA scores and impact.
“Uniform evaluations for service and material suppliers will be consistent across the company, providing investment stability and assurance,” Nasser said.
Performance will be tracked and measured on an ongoing basis.
“The initiative will help recognize the full value and potential that all our suppliers can bring to the table. Our goal is to create a win-win, more formal and systematic mechanism that puts everyone on an equal footing and increases competition to drive growth,” Saudi Aramco vice president of materials supply Abdulaziz A. Al Abdulkarim said.
Despite low oil prices, Saudi Arabia steadily pumped over 10 million barrels per day during the first half of the year and has shown no signs of slowing its production down.
Nasser has been serving as the company’s acting chief since May when oil giant began preparing for a round of restructuring that will eventually uncouple it from the country’s oil ministry.
He was formally named as Saudi Aramco’s president in September.