Saudi Arabia 2017 | ENERGY | INTERVIEW

TBY talks to Abdulaziz AbdulKarim, Vice President of Procurement & Supply Chain Management (PSCM) at Saudi Aramco, on the IKTVA program, supporting local content, and looking back over a successful year.

 Abdulaziz AbdulKarim
Abdulaziz AbdulKarim was appointed Vice President of Procurement & Supply Chain Management for Saudi Aramco on October 1, 2015. He has over 25 years of Aramco experience, primarily in petroleum engineering. He has held various positions upstream, and immediately prior to his current department he served as the Vice President for Information Technology. He has a degree in petroleum engineering from KFUPM.

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 SAR1.4 trillion (USD373 million) 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 hundreds of 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.

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 made 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. 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 readymade 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. We are proud of what has been accomplished during the first year of the program. A major milestone of IKTVA was embedding it in our procurement process where all major procurements now include IKTVA targets, IKTVA proposals are required to be included in bid submissions, and business allocation guidelines have been revised to reward IKTVA achievements. To date, IKTVA has been embedded in approximately SAR60 billion (USD16 billion) worth of contracts. Alongside, we have boosted the share of materials procured from local manufacturers. We are proud of how much ground we have covered since the launch of IKTVA in 2016, and going forward in 2017, we will continue to work closely with our suppliers and stakeholders to increase our local spending.