Aramco asks foreign firms to hire Saudi nationals

27 September 2016

In-kingdom clause is being added to contracts for international firms to drive localisation

Saudi Aramco is introducing a clause into contracts with international oil services companies and suppliers in the kingdom, giving them targets to hire Saudi nationals, according to an executive at the state-run oil and gas giant.

Aramco, the world’s biggest oil and gas exporter, is building its “In Kingdom Total Value Add (IKTVA)’’ programme, into the contracts of firms such as GE and Schlumberger, a basic pillar of which is to create jobs for qualified Saudi nationals, Abdulaziz al-Abdulkarim, vice president procurement and supply chain management at the company told reporters on the sidelines of Petrotech 2016 conference in Bahrain.

Aramco has already started working with its international partners to measure the baseline of implementation of IKTVA. “Based on that baseline, they have to work [to achieve the targets]. They are going to give us their plans [to hire Saudi nationals] and then we will work with them,’’ Al-Abdulkarim said.

He didn’t say if Aramco has given the international companies any particular targets as to how many Saudis they should hire.

If the international companies have a manufacturing facility and develop a supply-chain around it and hire Saudi nationals, it will increase the percentage points of their IKTVA programme implementation, he said.

Some of those companies said we have our own hiring and training programmes, he said adding that Aramco will accept that and auditing firms on Aramco’s behalf will ensure that they exercise strong governance in implementation of the programme and job creation.

IKTVA, announced in December last year, aims to increase the value of goods and services procured in the Saudi energy sector.

Saudi Aramco aims to double the percentage of locally-produced energy-related goods and services from 35 per cent to 70 per cent by 2021.

By shifting the focus of the energy sector to local industries, Aramco intends to create about 500,000 jobs for high-skilled jobs and long-term careers for Saudi citizens across growth industries.

A third target is for the Saudi energy goods and services industry to export 30 per cent of output over the same timeframe.

Aramco also plans to invest $334bn over the next decade across the supply-chain to sustain oil and gas production. About 42 per cent of the total would be spent on drilling, with 31 per cent on surface facilities and 11 per cent on infrastructure.

“That’s $33bn annually that will be progressively spent into the Saudi economy,” he earlier said at the conference.

Saudi Aramco plans to increase its oil well count to 1,000 by 2020 from about 850 in 2015. Wells producing gas will be increased to 500 from about 300 during the same period, Al-Abdulkarim’s presentation showed.

The kingdom is attempting to diversify its hydrocarbon dependent economy in the wake of low oil prices by developing industrial sector and creating jobs for Saudi nationals in private sector under its National Transformation Programme. The government plans to sell shares in state-owned Aramco in early 2018.

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