The Business Year

Abdulaziz AbdulKarim


Captain of Industry

Vice President Procurement & Supply Chain Management, Saudi Aramco


Abdulaziz AbdulKarim was appointed Vice President of Saudi Aramco’s Procurement & Supply Chain Management organization on October 1, 2015. He has over 25 years of Saudi Aramco experience primarily in Petroleum Engineering. He also held various positions within the upstream segment. Immediately prior to joining Procurement & Supply Chain Management he served as the Vice President of Information Technology. He also holds a BSc degree in Petroleum Engineering from KFUPM and Executive Management Program from The Wharton School.

“We are very proud of how much ground we have covered since the launch of IKTVA last year.“

What are the origins behind Saudi Aramco’s IKTVA program, and how will it contribute to the long-term, sustainable development of the Kingdom’s industrial sector?

We identified a strategic need for a robust Saudi energy and industrial sector in order to capitalize on our true long-term value, but we knew it was critical that any solution was collaborative in nature with our international supply chain, the Saudi private sector, and of course the government. IKTVA is that solution. It drives key activities towards localization and job creation, by measuring the added value brought to the Kingdom by a supplier. The program was designed to positively change the way Saudi Aramco engages with its suppliers when procuring goods and services targeting primary goals that will enable a sustainable economy, supply chain, and energy sector. Put simply, we will double the share of Saudi Aramco spend allocated to locally manufactured materials and services to reach 70% by 2021. Our forecast spend, approximately 1.4 trillion Saudi Riyals over the next 10 years, for our goods and services is a huge opportunity for our suppliers and investors to capture. Our partnership with them will create the economic and industrial building blocks for the Saudi energy sector. It will also create hundred thousands of direct and indirect jobs for talented young Saudi men and women over the long term. To meet the new demand for skilled manpower for drilling and oil field services as well as the professional and craft labor jobs required to build our facilities, we are establishing training centers and programs in collaboration with the related government entities. Across the Kingdom we will have about 28 training centers targeting 360,000 graduates by 2030.

Many within the business community have argued that the push by Aramco to promote local content up to 70% by 2021 has, in fact, been a long time coming. To what extent does IKTVA’s launch coincide with the drop in oil prices and, by extension, the government’s diversification reforms under Vision 2030?

IKTVA and its launch in 2015 was a long time in the works, developed in-house within Saudi Aramco. It would have gone ahead regardless of market dynamics. Shortly following the launch, the Kingdom saw the announcement for Vision 2030 that provided much needed focus and drive across the economy, and to which IKTVA is Saudi Aramco’s premier contribution. Beyond the specifics of IKTVA, we have been preparing for several years with a keen focus on business sustainability. We have been laying the economic groundwork to facilitate and enable success for our supplier network and enable the success of IKTVA and the transformation of the Kingdom’s economy to a more diversified industrial base. As I highlighted, we have formed partnerships with training institutions, worked closely with government entities, and built industrial parks, value parks, and economic cities. We have done this to ensure that a high quality workforce is available. There is an investment-friendly landscape; and there are ready-made hubs of economic activity for businesses to set up shops here in Saudi Arabia.

What have been some of the key early indicators of IKTVA’s success following the recent one-year commemoration of its launch, and what are your short-term objectives going forward?

We marked the one-year anniversary with real progress and results. In December 2016, we celebrated by gathering more than 700 attendees of our local and international suppliers along with the government entities and officials in “IKTVA Forum 2016.“ The Forum marked a major milestone in the trajectory to accelerate localization amongst Saudi Aramco’s supplier community. We are very proud of what has been accomplished during the first year of the program. A major millstone of IKTVA was embedding it in our procurement process where all major procurements now include IKTVA targets, and proposals are required to be included in bid submittals and business allocation guidelines have been revised to reward IKTVA achievements. To date it has been embedded in approximately SAR60 billion worth of contracts. Alongside, we have boosted the share of materials procured from local manufacturers. During 2016, our spend on locally manufactured materials reached over SAR10 billion, representing 43% of our direct materials spend which is the highest percentage ever achieved in our history in Saudi Aramco. At the same time, we established baselines for companies and industries to be our starting step, engaging with our major suppliers, to mutually develop realistic action plans and IKTVA targets for the next five years. As well as in December event, we awarded our suppliers with the “IKTVA Excellence Awards“ in recognition of their steadfast commitment and significant contributions to IKTVA in areas such as Saudi workforce, localization of goods and services, supplier development, training and development, and employee recognition. We are very proud of how much ground we have covered since the launch of IKTVA last year, and going forward in 2017, we will continue to work closely with our suppliers and stakeholders to increase our local spending. Currently, there are different planned investments in forging, chemicals, casting, motors, steel plates and more. All these investments will contribute greatly to developing our local supply chain and us realizing our 70% localization by 2021.

What impact will IKTVA have on multinational companies currently doing business with Saudi Aramco?

Early movers have seen the same opportunities as us and some of our biggest suppliers have re-written their business plans, and are even asking their suppliers for IKTVA metrics. To us these are meaningful key long-term performance indicators. More generally, IKTVA is positively changing the way suppliers—multinationals and Saudi companies—are looking to their investments in Saudi Arabia. We want an increased presence in Saudi Arabia not only to final assembly operations, but rather, to establish and develop their manufacturing supplier base, and regionalize their research and development (R&D) alongside their operations in the Kingdom. We facilitate this process by providing suppliers visibility into our 10-year demand in materials and services with the capability to drill down to specific details for serious investors. With this information and our proactive engagement we help investors develop their business case to localize. We are committed to those companies through our long-term agreements as well as through IKTVA primary objectives which are supporting the business allocation to those suppliers as well as rewarding their achievements.

To what extent would you agree that Aramco’s commitment to empower local industry could lay the groundwork for other major companies, perhaps even the government, to implement similar initiatives in the future?

IKTVA program has the required elements to act as a localization program for the oil and gas industry. It can also be slightly customized to be implemented at the national level for different industries and services. Since IKTVA’s launch, we have started an outreach program to increase the awareness of IKTVA for the business community as well as the government entities. We have seen a great interest in IKTVA from different the government organizations and major local companies that we have discussed the program with. Such discussion and collaboration is ongoing to ultimately adopt a localization program where we think that IKTVA can be the base of the national localization initiative.



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