Saudi Aramco begins local content initiative for suppliers
By Alex Endress, Editorial Coordinator
Saudi Aramco launched a local content program today that will prioritize the purchase of energy-related goods and services from local suppliers in Saudi Arabia.
Called the In-Kingdom Total Value Add (IKTVA) program, the new initiative first aims to double the percentage of locally manufactured energy-related goods and services to 70% by 2021. Secondly, IKTVA will target an increase in exports of Saudi-made goods and services to 30% by 2021 as well. The program’s final objective is to help create direct and indirect jobs within energy-related sectors for the Saudi population.
“IKTVA is a step-change in our commitment to local content development that is now required across our domestic and international supply chain,” Saudi Aramco President and CEO Amin H. Nasser said. “Sourcing a majority of materials, goods and services that we require locally will enable Saudi Aramco to not only embed greater competitiveness and efficiency in our operations, but will also help us fulfill our potential in support of the Kingdom’s growth, job creation and economic diversification objectives.”
With this new local content initiative, the company hopes to level the playing field for domestic and international suppliers through a more consistent and transparent process. IKTVA will provide uniform evaluations for service and material suppliers across the company. It will also establish a 3-year baseline score for each supplier, measured against internal metrics for local content and value creation. Saudi Aramco and each supplier will then jointly create an IKTVA action plan to increase the IKTVA score and impact on business segments, as performance will be tracked on an ongoing basis.
“IKTVA will create win-win, mutually beneficial partnerships between Saudi Aramco and our suppliers,” Mr Nasser said. “The scale of our diversified energy business and associated capital expenditure programs clearly create significant opportunities for those suppliers ready, willing and able to invest in Saudi Arabia and partner with Saudi Aramco on a long-term, sustainable basis.”
The IKTVA local content program will be integrated through Saudi Aramco’s supply chain via the Industrial Development & Strategic Development Supply Department recently formed within the company, Saudi Aramco announced.
“Through IKTVA, we can and will do much more to deepen our local manufacturing and supply chain capabilities,” said Nassir Al-Yami, Manager of the Industrial Development & Strategic Supply Chain Department. “We are encouraging a local supply chain that has deep roots here in the Kingdom and is committed to being part of our future success.”