Saudi Aramco presented its In-Kingdom Total Value Add (IKTVA) program to more than 300 local and international suppliers attending General Electric’s Global Supplier Forum in Riyadh last week.
Launched in December 2015, the IKTVA program looks to double the value of locally manufactured materials and services purchased to 70% by 2021, which will fuel an increase in exports and high-quality jobs for Saudis.
Abdulaziz A. Al Abdulkarim notes that IKTVA will act as a catalyst to drive investment by the company's supplier network in local goods and services.
IKTVA: Fair and Transparent
Abdulaziz A. Al Abdulkarim notes that IKTVA
will act as a catalyst to drive investment by the
company's supplier network in local goods
In a panel discussion held at the Global Supplier Forum, Abdulaziz A. Al Abdulkarim, Saudi Aramco vice president of Procurement and Supply Chain Management, said IKTVA will be a fair and transparent procurement mechanism for the company, as well as a catalyst to drive investment by Saudi Aramco’s supplier network in local goods and services. Investment in local supply networks will have profound impacts for the Kingdom, generating economic growth here in the Kingdom while creating high-skilled jobs for Saudis.
Al Abdulkarim said: “GE has a long history and excellent track record of doing business in the Kingdom. We are delighted that GE is proactively encouraging its supply chain partners to do more business with Saudi companies and institutions to help diversify and grow the local economy. With GE’s experienced and capable supply chain — known the world over for putting innovation first — all suppliers have the opportunity to be at the heart of both Saudi Vision 2030 and IKTVA’s success.”
Al Abdulkarim noted that Saudi Aramco plans to spend more than $300 billion over the next decade, providing opportunities for suppliers of materials and services, across a broad range of civil and industrial projects, drilling, and unconventional resources.
“Take a moment to consider those facts,”Al Abdulkarim said. “Ask yourself, ‘What does that mean for me and my business? Who are the potential value creation partners in this room — the Saudi small- and medium-sized enterprises, local training institutes, local manufacturers, local business support services?’ I strongly urge you to seek them out today and become an early mover. Become part of this powerful, thriving, diversified, economic ecosystem.”
MOU to Bring Manufacturing
While the forum provided a perfect venue for reaching out to local and international suppliers about Saudi Aramco’s future procurement strategies, it also allowed the company to put these strategies into action.
On June 1, the first day of the event, Yasser M. Mufti, Saudi Aramco executive director of New Business Development, signed a Memorandum of Understanding with GE and Cividale SpA of Italy to build a high-end forging and casting manufacturing facility — a first of its kind in Africa and the Middle East — that will serve the region’s maritime and energy industries.
With a joint investment of more than $400 million (SR1.5 billion), the new facility in Ras Al-Khair is designed to establish a high-value supply chain that boosts exports and economic competitiveness. Set to be operational in 2020, the plant is expected to create 2,000 quality jobs in the Kingdom and catalyze the growth of Saudi small- and medium-sized enterprises. The new facility — a world-class manufacturing plant — will operate as a joint venture of Saudi Aramco, GE, and Cividale under the Royal Commission of Jubail and Yanbu’ industrial area.
A Complementary Facility
The forging and casting manufacturing facility complements plans by Saudi Aramco to develop several industrial projects in the Kingdom, including a maritime project at Ras Al-Khair that provides facilities for a cluster of businesses involved in the building, maintenance, repair and overhaul (MRO) of offshore platforms, jack-ups, offshore service vessels, and commercial tankers.
Saudi Aramco is also working with partners to develop an onshore rig-manufacturing facility for providing new build and MRO services to onshore rigs and systems; an engine manufacturing project for the manufacturing, maintenance and repair of diesel engines, manufacturing and repair of marine pumps; and an Energy Industrial City to accelerate manufacturing industries in the oil and gas sector.
The forging and casting manufacturing facility will serve all of these projects, in addition to providing best-in-class services and technologies to downstream and other industries across the region and to global markets. It will also support the ongoing emphasis of the government, under Saudi Vision 2030, to develop the mining sector of the Kingdom by creating a domestic source market for various raw materials and supplies that go into the production line.
The collaboration with GE and Cividale is a strong example of the public-private partnerships that the government fosters under Saudi Vision 2030 to develop local manufacturing capabilities that add significant value to the economy. Creating a robust supply chain at home will not only help the company build positive synergies and cost savings in the oil and gas manufacturing sectors but also promote economic and industrial diversification in the Kingdom, spreading sustainable growth in the communities where we live.