Aramco maintains energy supplies uninterrupted during COVID-19 crisis

Aramco’s In-Kingdom Total Value Add (iktva) has helped the company’s supply chains remain uninterrupted, mitigating the impact of COVID-19 on its operations, the giant oil producer said in a statement.  

In addition to creating jobs and promoting investment, the program has also resulted in a robust commercial ecosystem that continues to function despite the global pandemic, senior vice-president of technical services, Ahmad A Al Sa’adi, said.

“One of the reasons we are able to continue providing reliable energy supplies to the world during the current COVID-19 crises, is our strong in-Kingdom network of partners and supply chain base,” he explained.

“Thanks to the iktva program, this network has been growing steadily. In addition to driving foreign investment and creating new opportunities, it is also ensuring Aramco’s resilience and reliability in times of global uncertainty.”

iktva has contributed to a significant expansion of Saudi Arabia’s industrial base, attracting an estimated capital expenditure of $6.5 billion.

The program has been incorporated into 750 Aramco contracts valued at more than $100 billion and the award of 50 Corporate Purchase Agreements (CPAs) worth $29 billion.

Aramco also signed 66 new iktva agreements worth a total of $21 billion in February.

“We are delighted with the progress of iktva, which reflects Aramco’s commitment towards a diversified and sustainable Saudi energy sector as envisioned by Vision 2030,” Al Sa’adi added.

So far, 108 manufacturing facilities are either operational or under construction.

iktva tallies with a government initiative to support domestic industry, which resulted in a 54% year-on-year increase in the number of new international companies entering Saudi Arabia in 2019 - a record year for foreign investment in the Kingdom.

The program has resulted in a significant increase in commitment to Saudi employment and development at the companies it deals with.

“We have seen a 50% increase in the number of Saudis employed by our suppliers,” revealed Aramco’s Vice-President of Procurement and Supply Chain Management, Mohammed A Al Shammary.

“In addition, there has been a 30% increase in female employment – further promoting diversity and inclusion in the workplace.”

Under iktva, companies bidding for potentially lucrative contracts with Aramco must meet certain criteria to be considered.

This aims to develop a vibrant supply chain and for Aramco to achieve 70% localization of all spending, creating a business environment that provides thousands of new jobs. Aramco has achieved 56% iktva at the end of 2019, a significant increase from 35% in 2015.

Aramco said iktva has tripled the spending of its suppliers on goods and services sourced from the local market, doubled its suppliers’ spending on Saudi wages and more than tripled their spending on Saudi training and development.

Meanwhile, companies dealing with Aramco have also tripled their spending on R&D – resulting in the emergence of new, homegrown technologies – and Aramco’s suppliers have grown their export activity by 50%.

iktva has also spurred a series of high-profile investments in Saudi Arabia and driven a number of anchor projects to catalyze the localization process, with “lighthouse projects” such as King Salman International Complex for maritime Industries and Services, King Salman Energy Park, casting and forging, rig manufacturing and steel plate manufacturing.