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Reuters
State oil giant Saudi Aramco signed deals with several foreign companies as part of a drive to expand the kingdom’s industrial base and manufacture a bigger share of products domestically. Deals include setting up joint ventures with US-listed firms Rowan Companies and Nabors Industries to own, manage, and operate drilling rigs in Saudi Arabia.
Aramco also signed agreements in local manufacturing development with Jubail Energy Services Company (JESCO) and ArcelorMittal in Jubail
on the Gulf coast for tubes used in oil and gas production. It signed ano-ther agreement with J-Power Systems Corporation Japan for submarine electrical cables.
The agreements were signed on Wednesday on the sidelines of Aramco’s The In-Kingdom Total Value Add Program (IKTVA). No financial details were disclosed. Last year, Aramco said it aims through IKTVA to double the percentage of locally-produced energy-related goods and services to 70 percent by 2021 and to export 30 percent of the total domestic energy goods and services produced in the Kingdom over the same time frame. IKTVA, Arabic for self-sufficiency, will help generate 500,000 direct and indirect jobs for Saudis, a key part of Saudi Arabia’s Vision 2030, an economic reform programme the government announced this year, in which Aramco is to play a big role in developing industrial projects as Saudi Arabia tries to diversify its economy beyond reliance on oil exports.
Aramco outlined plans last year when it launched IKTVA to spend $300 billion on its supply chain in the next 10 years to boost local manufacturing. “Our local manufacturing share has reached 10 billion riyals, or 43 percent, which is an increase of 16 percent from 2015, and represents the highest level of local content in the company’s history,†Saudi Aramco’s CEO Amin Nasser told a business audience.
Nasser said companies had to change business plans to accommodate changes in doing business with the oil giant by manufacturing more in the kingdom, the world’s largest oil exporter. “They need to invest more and we understand it needs to be a win-win. We would like them also to see what issues they might have in terms of investments and how we can help them make it viable to bring more investments here,†he said. The local sourcing target comes at a time of significant financial stress in Saudi Arabia, as the Gulf’s largest economy has had to adjust to lower oil prices and reduced state spending and economic growth.