2006 News Story

Saudi Aramco expects larger role for local companies in energy projects

As Saudi Aramco engages in its largest expansion ever, Vice President of Materials Supply Esam Mousli highlighted the considerations for increasing local content in Saudi Arabia’s manufacturing and services sectors.

Speaking Monday at the Saudi Energy Forum Leveraging Hydrocarbons to Create Prosperity in Dammam, Mousli pointed out the challenges, opportunities and success factors that are crucial to sustaining the Kingdom’s competitive advantage.  Among those is maintaining opportunities in both the public and private sector for absorbing, disseminating and creating technological knowledge in the Kingdom and the need to establish a well-developed information and communications technology infrastructure.

Another critical factor is the importance of local manufacturers using quality standards, such as ISO 9000, in their production processes. Most importantly, Mousli cited the need to develop human assets through establishing effective networks that connect industries with higher education institutions, to ensure a steady stream of scientists and engineers from the local population. Mousli suggested that private businesses consider initiatives to identify much-needed educational curricula, support research centers and technical associations, and focus contributions to support private sector technology activities.

Turning to the challenges ahead, Mousli pointed out that high energy demand historically results in high project activity in the Gulf region. Project activity n the GCC is set to reach an astounding US$1.2 trillion during the period 2006-2011. Mousli said that of that figure, $366 billion is in Saudi Arabia.  Aramco’s projected materials procurement is $40 billion, which will create huge opportunities for all of Saudi Arabia and the Gulf Region.

Mousli presented an analysis showing that approximately 49% of Saudi Aramco materials and equipment purchases are potential targets for local manufacturing; 20% is already manufactured in Saudi Arabia. Potential commodities of the 49% include such items as pipes, valves, chemicals, and wellheads.

Mousli said that “Saudi Aramco wants all local suppliers and out-of-Kingdom manufacturers to be recognized for adding value to and increasing local content in our economy, specifically in manufacturing and services. Saudi Aramco is optimistic that the opportunities created by mega-expansion projects will serve as catalysts for further industrialization and diversification of the national economy.”