In pursuit of opportunities to reduce costs, strengthen its supply chain, and spur job creation, Aramco marked a pair of milestones toward its ambition

Saudi Aramco pursued a number of initiatives in the domestic energy sector consistent with its localisation strategy, including forming two joint ventures to help optimise drilling costs: Saudi Aramco Nabors Drilling (SANAD), with Nabors Industries Ltd. for onshore rigs, and Aramco Rowan Offshore Drilling (ARO), with Rowan Companies plc for offshore rigs.

The ventures, which own and operate the rigs, commenced operations in 2017 and are expected to deliver approximately 5,000 local jobs.

ENGINEERING OPPORTUNITIES

Engineering and construction are potential high growth sectors closely tied to Aramco’s business objectives. In pursuit of opportunities to reduce costs, strengthen its supply chain, and spur job creation, Aramco marked a pair of milestones toward its ambition of executing 80 per cent of its engineering work in-kingdom.

First, Aramco entered an in-kingdom joint venture with Jacobs Engineering Group, which aims to provide professional programme and construction management services for social infrastructure projects, including government projects, on an arm’s length basis within Saudi Arabia. The joint venture will help build capacity in the kingdom and create opportunities for other players in this sector, with the potential to deliver approximately 3,000 jobs.

Second, Aramco established centres of engineering excellence at five local contractor offices. Aramco signed a number of other Memoranda of Understanding with international companies aligned with its strategic objectives. Each of the agreements is designed to enable greater efficiency and improved performance in Aramco’s operations, along with the added benefits of creating high value jobs for Saudis and furthering the kingdom’s economic diversification. These agreements cover areas such as digitisation initiatives, gas turbine maintenance and repair, human capital development, and oil field goods and services.

LOCALISING ARAMCO’S SUPPLY CHAIN

The King Salman International Complex for Maritime Industries and Services is envisioned to become a world-class maritime complex and a hub for regional maritime engineering, construction, and related expertise. The complex, which is expected to generate more than 80,000 jobs by 2030, targets localising essential links of Aramco’s supply chain related to offshore drilling and shipping activities. Expected benefits include reduced response times, improved agility, and cost optimisation.

Plans for the maritime complex include facilities to construct vessels and offshore drilling rigs and platforms; associated capabilities for maintenance, repair, and overhaul; an engine manufacturing plant; a maritime academy; and offshore engineering, procurement, construction, and installation capabilities.

In 2017, Aramco established International Maritime Industries, a joint venture with Dubai-based engineering firm Lamprell, the National Shipping Co of Saudi Arabia (Bahri), and Hyundai Heavy Industries in South Korea for the maritime yard. Major operations are expected to commence in 2019, with full production capacity of the facility reached in 2022.

With McDermott International, Aramco signed a binding Memorandum of Understanding for the construction of facilities at the complex, including fabrication for offshore oil and gas developments at Ras Al Khair. Aramco also awarded the engineering, procurement, and construction contract for dredging and reclamation.

A PARK FOR ENERGY

A major component of the expanding in-kingdom energy ecosystem is the King Salman Energy Park. In 2017, Aramco began planning for development of Phase I of the park. Located in the Eastern Province, the project is expected to attract international third-party manufacturers and suppliers of goods to the energy sector to locate their facilities in the kingdom.

Completion of Phase I of the park in 2021 is designed to deliver the infrastructure and services.