Aramco aims to achieve 70 per cent localisation of all spending, creating a business environment that will promote domestic energy-related industries that are globally competitive and drive supply-chain efficiency through the iktva programme

Aramco’s In-Kingdom Total Value Add (iktva) programme, launched in December 2015, has been a pivotal catalyst in the development of Saudi Arabia’s energy services sector.

With iktva participation an essential requirement for companies aiming to do business with Aramco, over the years, the programme has made significant strides in helping hundreds of local industries flourish. Through this innovative programme, local industries have secured billions of dollars in deals, underscoring iktva’s vital role in the Kingdom's economic landscape.

At its core, iktva is designed to prioritise and promote domestic value creation within Saudi Arabia. The programme aims to drive increased investment, foster economic diversification, create jobs, and enhance workforce development across the Kingdom. By focusing on these objectives, Aramco seeks to achieve 70 per cent localisation of all its spending, thereby establishing a business environment that will generate thousands of new jobs and attract international business. This ambitious target reflects Aramco’s commitment to building a sustainable and self-sufficient energy sector in Saudi Arabia.

iktva programme is on track to meet its targets

The iktva programme not only supports the long-term vitality of Aramco’s commercial ecosystem but also plays a crucial role in attracting, establishing, and promoting domestic energy-related industries. These industries are envisioned to be globally competitive, driving supply-chain efficiency and adding value across Aramco’s operations.

The programme is also a cornerstone in Aramco’s efforts to create a level playing field for more than 1,000 suppliers that the company engages with, both locally and internationally. Consistency and transparency are prioritised within iktva, ensuring that suppliers benefit from a fair and competitive business environment.

In addition to its economic impact, iktva has a strong focus on workforce development. The programme aims to prepare 360,000 trainees for the labour market by 2030, equipping the next generation with the skills necessary to thrive in the evolving energy sector. This initiative is part of a broader strategy to ensure that the Saudi workforce is capable of meeting the demands of a rapidly changing global economy.

Aramco’s commitment to domestic value creation and localisation through iktva not only strengthens the Kingdom’s energy sector but also contributes to the broader vision of economic sustainability and growth.

SMALL AND MEDIUM ENTERPRISES

Small and medium enterprises (SMEs) are a special iktva focus. The backbone of thriving economies everywhere, SMEs are the dynamic drivers of innovation and competition.

To harness their vital contributions, iktva connects major suppliers with SMEs to help small businesses grow.

"SMEs are the engines of innovation for economic growth and development. They have the flexibility, know-how and experience in the market. They also have the products that the oil and gas industry needs," says President and CEO, Amin Nasser.

Through iktva Aramco is building a world class supply chain to support its needs and the needs of its partners. The company strives to cultivate local business with the goal to retain 70 per cent of all procurement spend in-kingdom.

Iktva’s proven success model has become the cornerstone for the Local Content and Government Procurement Authority localisation model, which will accelerate the maturity of the kingdom’s industrial ecosystem across all sectors. From Jazan Economic City to the King Salman International Complex for Maritime Industries & Services, iktva has created an ecosystem of integrated value chains to help businesses hit the ground running in Saudi Arabia.

The iktva programme has also demonstrated the benefits of creating successful partnerships with business, government, and academia. It also increases the company’s competitiveness, drives industry collaboration and brings innovation to the kingdom through research and development. The synergy driven by the iktva program has delivered greater levels of prosperity for the kingdom, the local business community, and Aramco.

$6BN DEALS

In February, Aramco signed 40 corporate procurement agreements worth $6 billion with suppliers in Saudi Arabia. The agreements aim to strengthen Aramco’s domestic supply chain ecosystem, contributing to the company’s resilience, reliability and ability to meet the evolving needs of its customers.

They also provide suppliers with long-term visibility of demand, enabling them to capture future growth and advance localisation efforts.

Wail Al Jaafari, Aramco Executive Vice-President of Technical Services, said: "The 40 new agreements are expected to contribute to the domestic value chain, and further enhance the ecosystem that Aramco is helping to build. These agreements move us towards a more prosperous, diverse and resilient supply chain, which will help ensure business continuity. They also represent a key milestone on our iktva journey, and provide our partners an opportunity to benefit from a dynamic and increasingly diversified operating environment."

Covering a variety of sectors, the new corporate procurement agreements span the supply of a range of products comprising strategic commodities, such as instrumentation, and electrical and drilling equipment. In addition, Aramco signed two memoranda of understanding with strategic partners to collaborate on localisation and supply chain development.

Meanwhile, the iktva forum held annually, is the leading global energy supply chain event, hosting multiple sectors, local and international, small and large, and attracting influential executives and global industry leaders.

The forum and exhibition provide a platform for companies interested in establishing operations in Saudi Arabia to engage with the Kingdom’s energy sector stakeholders and their key suppliers. It is an opportunity for Saudi Aramco’s partners to get together and take stock of the positive impact of the programme to drive, support, and accelerate investments and operations. Companies interested in establishing operations in Saudi Arabia get to engage with the Kingdom’s energy sector stakeholders and key suppliers.

A broad spectrum of local and international investors are brought together to explore investment opportunities. Experts and specialists from various industries and companies contribute to dynamic panel discussions, presentations, workshops, and seminars. The event also offers an opportunity for collaboration and engagement between companies in the energy sector supply chain.

Attendees have an opportunity to interact with a range of companies who have either established operations in Saudi Arabia, or are in the process of doing so. Many of Saudi Aramco’s major suppliers are present, and are themselves driving the localization of their own supply chains.