Saudi Aramco’s In-Kingdom Total Value Add (iktva) Forum 2016 to showcase, recognize companies in boosting Kingdom localization efforts

Keynote Address by Amin H. Nasser, Saudi Aramco President & CEO, iktva forum 2016

Your Royal Highness, Your Excellencies, distinguished guests, ladies and gentlemen, good morning.

As I just said in Arabic, we are once again honored that His Royal Highness, the Amir of the Eastern Province, Prince Saud bin Naif bin Abdulaziz, could grace us with his presence.

We are also delighted that His Excellency Khalid Al-Falih – the Minister for Energy, Industry, and Mineral Resources – could join us.

Most of all, I would like to welcome all the business people here today who have come from near and far, bringing your diverse strengths to the table.

You, our partners, are the lifeblood of iktva.

Your success is our success.

Of course, since iktva was launched 12 months ago, the context has only become more challenging.

First, the oil market remained weak and volatile, causing further project deferments or cancelations, with near- and long-term consequences.

Second, the long-term trend of costs for the industry continues to rise (despite the recent drop resulting from reduced activity).

Third, while maximizing shareholder value became even more critical for us at Saudi Aramco, as the launch of Saudi Vision 2030 made it crystal clear.

In response, we have renewed our focus on excellence in every aspect of our business.

We have enhanced the efficiency and reliability of our supply chain and procurement mechanisms, and ikvta is now a key driver.

And the pioneering aspect of iktva is something we take very seriously at Saudi Aramco.

Because diversifying the economy, growing the private sector, increasing energy sector efficiency through localization, and privatizing major state enterprises are integral to Vision 2030.

In turn, these strategic goals will drive exports and create employment for our youth.

All these priorities are fundamental to anchor projects like the Fadhili Gas Project, the Energy Industrial City, and the King Salman International Complex for Maritime Industries and Services.

These are massive investments that in some cases will create completely new industries here, and will need completely new, localized supply chains.

So, yes, the short-term challenges for iktva have increased.

But the opportunities to make iktva a long-term win-win have undoubtedly increased as well.

Of course, some issues are more pressing than others.

When people ask what drives us most about iktva, it is creating the building blocks for a thriving and competitive Saudi energy sector.

Because doing so will help to create half a million direct and indirect jobs for talented young Saudi men and women over the long-term.

So building the enabling ecosystems to invest in that sustainable talent pipeline is one of our highest priorities.

And some amazing things have already happened.

In partnership with TVTC, 12 national training centers are now operational Kingdom-wide, which will increase to 28 by 2030.

Between them, these centers will have the capacity to graduate up to 360,000 young trainees in a wide range of disciplines.

Elsewhere, Third Party certification of the iktva baseline for our top 100 suppliers has also been completed.

And since June 28, when it became a formal part of our procurement process, I am proud to announce that iktva has been embedded in over 60 billion riyals’ worth of contracts.

On the supplier side, I know that many of you have totally re-written your business plans to reflect the new requirements for doing business with us.

For the first time, major suppliers are asking their supply chains for their iktva percentages.

And most pleasing of all, our local manufacturing share has reached 10 billion riyals, or 43%, which is an increase of 16% on 2015, and represents the highest level of local content in the Company’s history.

We are proud to celebrate your efforts later with the first ever iktva Excellence Awards.

Of course, our journey has only just begun.

Because everyone has gaps to bridge by delivering true local content in the Kingdom, not just final assembly lines.

We want true value add, not numbers that hide the true position.

Additionally, with the firm foundations now in place, we must all now concentrate on the finer aspects of the program.

And I also encourage you to regionalize your R&D here in the Kingdom, as several have done at Dhahran Techno Valley, for example.

If we can do this – driven by the high and growing demand for your products and services in the Kingdom and the region – we will all have a much more responsive, efficient, and reliable holistic system.

Ladies and Gentlemen, last year Saudi Aramco called for a new way of doing business, and we have shown you we are serious.

Many of you have answered with action as well as words.

We know that the market is more challenging.

But a significant growth in our oil and gas activities means we also remain committed to procuring goods and services worth more than 1 trillion riyals over the next decade.

So there are vast opportunities for all our partners by ensuring that 70 percent of those riyals are adding value in the Kingdom by 2021.

But there is an even more powerful incentive to get iktva right.

Talented Saudi men and women are passionate about making a difference to their country – in tough times and often in tough places.

Tough times don’t last; but talented, passionate, and tough people do.

And, with your help, this priceless resource can be the lifeblood of our nation’s transformation.

Thank you.