Saudi Aramco aims to localize 70% of supply chain by 2021

Saudi Arabian Oil Co. (Saudi Aramco) is planning to double the amount of locally-made goods and energy-related services to account for 70 percent of its supply chain by 2021, the company’s chief executive and president Amin Nasser said on Tuesday.

Over the next ten years, the company will spend $300 billion on efforts to boost its supply chain.

The new initiative is part its In-Kingdom Total Value Add (IKTVA) program which aims to increase investment, economic diversification and job creation. The strategy, which was also unveiled by during a launch event in the kingdom, was described by Nasser an “overdue” plan that sets “challenging targets.”

Under the plan, the state-owned energy giant will also export 30 percent of its output of energy goods and services in six years’ time.

In addition, Saudi Aramco is aiming to create half a million well-paid direct and indirect jobs for Saudi nationals over the long-term. The company is currently working with ministry of labor to establish 22 national local training centers by 2025.

For years, the world’s biggest oil exporter has attempted to decrease its reliance on crude oil exports with little results. Such efforts have been accelerated recently by the collapse of oil prices, which more than halved in the past year.

“What has been missing is a formal mechanism that enables fair competition as part of a local content strategy,” Nasser said, adding that the IKTVA program would fill that gap and provide a mechanism, that “puts local content at the heart of our procurement process, and will be a requirement of doing business with Saudi Aramco going forward,” he added.