World Petroleum Congress (WPC)

Keynote Remarks by Amin H. Nasser, Saudi Aramco President & CEO

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

We are deeply honored that His Royal Highness, the Amir of the Eastern Province, Prince Saud bin Naif bin Abdulaziz, could be with us for the third year in a row.

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

It shows the importance they both place on iktva.

And moving to Dhahran Expo this year shows how this event keeps increasing in importance to all our stakeholders.

That’s why yesterday we dedicated one full day just to SMEs, and an exhibition running alongside the forum for the first time.

So let me welcome all the business people here today who have come from near and far.

Today, I want to reflect on this year’s iktva achievements, the challenges that still lie ahead, and the key role for SMEs in meeting them.

However, the strategic significance of iktva in a changing world is less widely known and I would like to focus on that first.

For decades, our business partners successfully served our need for materials and services.

But despite some local success stories, the majority of our materials and services came from abroad.

Yet this is strategically important to us at Saudi Aramco, so continuing to import huge amounts of materials and services at growing levels was no longer tenable.

Furthermore, wider global developments are fueling a new logic in strategic international investments.

Economic growth rates in developing nations are twice those of developed nations, while population growth is almost entirely occurring in the developing world.

In many cases, between 50 and 75 percent of the sales of industrial companies are now outside their home markets, and this situation is likely to intensify.

As a result, the long-term prosperity of developing nations is seen as critical to the long-term success of major global corporations.

They increasingly appreciate the wisdom of locating where a large share of future business is going to be, transferring technology, and developing local talent.

In short, they are wisely following the growth, to allow those relationships to flourish.

That is why we launched our iktva program two years ago, and made it a formal requirement of doing business with Saudi Aramco.

We were also clear that iktva had to be a win-win for our suppliers too.

As I said two years ago, Saudi Aramco expected to spend more than 1 trillion Saudi riyals over the next decade; and that has not changed.

But companies with a local presence are winning increasingly larger shares of that huge amount of business. 

And they are increasingly taking advantage of the industrial growth in a wider range of sectors such as chemicals and renewables, automotive and defense, whose supply chains tend to overlap.

In fact, if you want to win business in sectors like these, then the increasingly clear reality for international companies is that your regional hub will be right here in Saudi Arabia. 

To develop a real competitive advantage here means locating here.

But doing so will also protect significant parts of your business back home – and that is a point I want to stress.

In return, we are working with the government to improve the enabling environment – from cutting red tape to promoting economic and industrial diversification through our work on anchor projects.

Indeed, as part of the government’s national capacity building efforts, I am delighted to note that we are now over half-way to our goal of 28 national training centers by 2030.

That progress has been more than matched by record breaking iktva results on the ground once again this year.

In the manufacturing sector alone, half of our goods now come from local manufacturers.

And I am delighted to announce that the overall iktva score now stands at 45%.

So our iktva strategy is working on multiple fronts as the logic beds in.

Later this morning, the iktva Excellence Awards will recognize some truly great achievements in 2017.

Yet some significant gaps remain.

For example, I cannot overemphasize the importance of establishing local R&D to support localized industries on a long-term basis.

But, to be candid, the biggest gap is a flourishing SME sector.

In OECD nations, SMEs provide 50 to 65 percent of the value added on average.

They account for approximately 70% of employment.

They are also the engine of major innovation for economic growth and development.

And they enjoy greater proximity to their customers, greater knowledge of their markets, and far greater agility to create differentiated products.

In other words, they are the rock on which developed nations’ economies, industrial leadership, and distinct competitive advantage is built.

Yet, here in the Kingdom, SMEs currently contribute just 20% to GDP, less than half of industrialized nations.

That’s why Saudi Vision 2030 has set an initial target of moving their contribution from 20% to 35%.

And to help them deal with regulatory requirements, financing needs, research requirements, and talent development, the Kingdom recently created the General Authority for SMEs.

For us at Saudi Aramco, our targets for SMEs are equally clear, and fundamentally driven by commercial considerations.

Unless we leverage the full power of SMEs we will never reach our headline iktva targets.

By contrast, a quality-driven, efficient, and locally accessible SME base will increase the reliability of our plants and operations, intensify the management of our costs by optimizing inventories, and provide even greater reliability for our customers around the world.

So as I told SMEs yesterday, we have already identified 140 SME development opportunities, across 10 industrial segments, worth around 60 billion Saudi riyals.

These opportunities include growth within the chemicals conversion parks at Sadara on the Arabian Gulf and PetroRabigh on the Red Sea coast.

And they are expected to help create over 40,000 new jobs, and potentially add around 30 billion Saudi riyals to the Kingdom’s annual GDP.

Most of all, we want 70 percent of those 1 trillion riyals I mentioned earlier to be spent locally.

And we want a large portion of these opportunities to fall to locally-based SMEs who will power us all towards our ultimate, shared iktva targets.

Because, Ladies and Gentlemen, iktva is all about the outcome.

The historic transformation of Saudi Aramco and the Kingdom is about to unleash massive opportunities here for global investors in a range of key sectors.

The closer you are to those opportunities, the deeper the business relationship you will have with us, and the brighter your future will be.

So join us, and let’s maximize the value from every riyal we spend here in the Kingdom, while sharing the enormous benefits with our respective shareholders, and the communities we are proud to serve.

Thank you.