Local content requirements in oil industry earn Saudi Arabia more than US$100B

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(Upstream) Saudi Aramco, the world’s largest crude oil exporter has signed 50 agreements at its in-kingdom total value add (IKTVA) forum and exhibition at Dhahran in Saudi Arabia.

Leading oil and gas services players Schlumberger, TechnipFMC, Larsen & Toubro, Honeywell, Baker Hughes and Cameron are among of the industry heavyweights to have inked agreements at the IKTVA event.

Some of the key deals include partnerships on climate leadership and digitalisation through localisation with Schlumberger; wellhead equipment localisation procurement agreements with Cameron, TechnipFMC & Baker Hughes; and a pressure vessel fabrication localisation deal with L&T, Aramco said on Monday.

The Saudi Arabian state-owned giant has an increased focus on localisation in line with its 2030 long-term strategy.

Local contribution

The company said that “local content requirements embedded in thousands of contracts have contributed more than $100 billion to the national economy”.

The IKTVA programme launched in 2015 “aims to drive domestic value creation, maximise long-term economic growth and diversification”, and build a supply chain that facilitates the development of a globally competitive energy sector in the kingdom, the company noted.

“As a result of IKTVA, 59% of Aramco’s spending in 2021 was directed to domestic suppliers, up from 35% in 2015 when the program was launched,” it said.

Amin Nasser, Aramco chief executive said that IKTVA has helped the company to prepare for the uncertainties caused by the coronavirus pandemic.

“Our investment in a diversified network of suppliers has helped us maintain a track record of reliability, despite the ongoing impact of Covid-19 on global supply chains,” Nasser said.

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