Supply chain success stories: five IKTVA partners showcase Saudi Aramco’s win-win local content strategy

Saudi Aramco’s In-Kingdom Total Value Add (IKTVA) program is designed to locally source the company’s massive supply chain by incentivizing investment by international and local equipment and service providers, and small and medium enterprises (SMEs). More than 400 companies supplying 24 commodities are currently IKTVA partners, working with the energy and chemicals giant to drive domestic value creation for mutual benefit.

Here are some of the program’s success stories, showcasing how localization positions partners for competitive advantage, while it helps build a more diversified economy, a stronger workforce, and greater innovation and R&D capabilities.

Baker Hughes: 80 Years of Partnership in the Kingdom

Baker Hughes, a GE company (BHGE), has been operating in the Kingdom for more than 80 years, beginning with the discovery of Dammam Well No. 7, or Prosperity Well, in 1938. BHGE operates more than 10 manufacturing, assembly, maintenance and research and development facilities aimed at boosting local potential and capabilities.

BHGE’s vital facilities in the Kingdom include a drill bit plant that has locally manufactured and exported an unprecedented 10,000 drill bits to more than 40 countries since 2011. Its holdings also include a pressure control facility that is one of Baker Hughes’ largest companies worldwide, and the Dhahran Global Technology Center at Dhahran Techno Valley that works with customers to address unconventional reservoir challenges.

BHGE employs more than 2,650 employees in the Kingdom, of whom more than 1,400 are Saudis, and more than 36% are women in science and engineering positions. BHGE is committed to helping build a solid supply chain the Kingdom, given that its supplier base includes more than 1,350 local suppliers and its spending on local procurement exceeds SR300 million annually.

At BHGE, localization is more than a commitment to meet the set targets, as the company seeks to establish connections covering all facets of the local economy through technology and knowledge transfer, local and global job opportunities, value addition across the local supply chain, and a local manufacturing base.

Affirming its commitment to the Vision 2030 and IKTVA, BHGE developed a strategy to invest in significant projects such as the King Salman Energy Park (SPARK), Jubail Industrial City (JIC), and Dammam Second Industrial City.

Schlumberger: Quantum Leap in Local Content Management

Schlumberger, the world’s leading oil and gas technology provider, has significantly contributed to promoting local content and effectively aligned with IKTVA to bring about a quantum leap in its operations, as the company’s strategy is centered on doubling its local procurement by 2021, hitting 70% job localization by 2020, promoting local industries, and embarking on exportation.

During 2018, Schlumberger hired roughly 732 Saudis in engineering and administrative positions. Last year, Schlumberger’s procurement from the Saudi market in 2017 made up more than 37% of its total sales in the Kingdom of Saudi Arabia during the same period.

In line with its plans to add new industries boosting local content, Schlumberger has leased 500,000 square meters in King Salman Energy Park (SPARK) to set up an industrial complex serving local and regional markets. Construction commenced in early 2018, with the completion of second phase by late 2019.

ADC: An IKTVA Award Winner

The Arabian Drilling Company (ADC), incorporated in 1964, highlights IKTVA’s role in fostering localization in onshore and offshore oil and gas exploration. Since its inception, ADC has developed a creative localization, Saudization and training strategy focusing on quality employment and innovative training to develop and retain high-caliber Saudi workers.

Though ADC has received two IKTVA award over the past two years – the “Best Staff Recognition Employer” in 2016 and “Best Staff Training and Development Employer” in 2017 – the company’s ambition knows no bounds as it works consistently to meet IKTVA’s ambitious ratios.

ADC has hired around 2,400 Saudis since 2015, and will graduate around 450 apprentices from its diverse in house apprenticeship programs.
ADC’s spend on local procurement to total procurement increased from dramatically from 42% in 2014 to 72% in 2017.

AZR Technologies Expands in Localization and Procurement

Backed by Wa'ed, Saudi Aramco’s entrepreneurship center, AZR Technologies seeks to be a key enabler in the Saudi oil and gas industry, a pacesetter in localization, and an innovator of high tech services and industries. AZR Technologies is the first Saudi company to provide oil and water well downhole inspection services.

AZR Technologies has been significantly supported by IKTVA, which helped create a business enabling environment where leading companies can synergize with new startups, as AZR has become able to add value to those startups and provide training opportunities for their employees.

With plans to align with IKTVA through 2021, AZR Technologies seeks to further localize its operations and procurement from its current 65% spending on local procurement, further diversify and export its well downhole inspection services to neighboring markets, and create hundreds of job opportunities and professional training for talented Saudis.

Though still under incorporation, AZR Technologies has localized 70% of all positions in oil well inspection, and provided more than 900 training hours to its employees in certified training institutes – not to mention in house and on job training.

Innosoft: A Digital Transformation Pacesetter

Innovative Software, LLC (Innosoft) serves as a role model for entrepreneurship. The vibrant technology company presents an opportunity to add much value to economic diversification, and actively contribute to the roll-out of innovative, industry specific technological solutions.

Incorporated in early 2011, this Saudi organization acts as a think tank designed to provide groundbreaking technological solutions to the biggest challenges facing businesses and the local market. Driven by its position in Wa’ed’s Network of Entrepreneurs, Innosoft earned the prestigious Dr. Ghazi Al Gosaib Award for Best Promising Enterprise, was rated among the Kingdom’s top 100 innovative and leading enterprises by Forbes, and earned Saudi Aramco’s IKTVA Award for the Best SME in 2017.

Innosoft pursues expansion and wider contribution in digital transformation and local production by relying primarily on the talented Saudis who make up 80% of its manpower. In addition, Innosoft holds annual undergraduate training and development programs as part of its administrative and professional training program.

With 85% of Innosoft’s requirements procured locally, the company is in the process of offering more new services and products, including digital transformation, to the local market over the next few years. Innosoft currently exports 5% of its services and products.