Saudi Aramco signs 59 agreements to foster local industrial ecosystem

Oil giant Saudi Aramco has signed 59 corporate procurement agreements (CPAs) with 51 local and global manufacturers to create 5,000 new jobs in the country over the next decade.

The agreements, valued at $11bn, are expected to reinforce Aramco’s supply chain and result in the development of materials manufacturing facilities in the kingdom, the company said in a statement on Tuesday.

Under our @iktvaAramco program, we sign 59 agreements to invest in localizing strategic commodities and enhancing the local industrial ecosystem#aramco

— aramco (@aramco) November 22, 2022

The agreements cover multiple commodities, such as drilling chemicals, wellheads, switchgears, vibration monitoring systems, pipes, compressors, structure steel, fittings and flanges, and air-cooled heat exchangers. Baker Hughes, Cameron Al Rushaid, Halliburton, SLB, and TechnipFMC were among the companies signing the agreements.

The agreements also fall under a strategic pillar of the Aramco in-kingdom total value add program (iktva), wherein they are used to establish long-term agreements and commitments with supplier partners. Since its launch, the iktva programme has contributed more than $130bn to the kingdom’s GDP, and helped create more than 100,000 supply chain jobs for Saudis.

“Our significant investments in a network of accomplished local suppliers strengthens Aramco’s resilience, ensuring that we remain the world’s most reliable energy company,” said Ahmad A. Al-Sa’adi, Aramco senior vice president of technical services.

“We are also extensively building commercial ecosystems globally by partnering with some of the world’s top energy, logistics, and manufacturing companies.”

Under their CPA agreements, supplier partners agree to establish local facilities, transfer technology, perform local research and development, and develop the local workforce and supply chain, the statement added.

The oil giant has signed over 100 CPAs since its launch. These agreements have driven localisation in critical commodities such as drill bits, downhole, valves, pressure vessels, and process automation systems. Some CPA holders also export materials globally.