As a state-owned entity that competes with commercial companies, Saudi Aramco always treads a fine line between what is good for the company and what is good for Saudi Arabia.
The general engineering services-plus (GES-plus) contract is a good example of the line Aramco has to walk.
The GES-plus programme is designed to maximise the amount of experience local engineers get on the oil major’s multibillion-dollar projects.
Under the scheme, international contractors agree to sign joint-venture agreements with local engineering consultancies and carry out a large percentage of any design and project management work they win from Aramco in the kingdom.
On paper, the GES-plus is a forward-thinking programme that ensures knowledge transfer to local engineers and points to a future where large-scale projects can be conceived, designed and built in Saudi Arabia using local professionals.
In reality, the transition to GES-plus is not going as smoothly as Riyadh would have liked and reports are that all the five signatories will not be registered until the end of 2011 at the earliest due to bureaucracy.
What is also clear is that if most design work is kept in the kingdom, then Saudi Aramco has to be braced for higher costs at the design stage. Maintaining an office of 600 engineers within the kingdom will have to be reflected in the bid prices.
On top of this, there is the frustration of the international engineering consultancies that have invested heavily in bolstering their local capabilities, but have yet to see any of the rewards.
The GES-plus is a good idea and needs to be implemented. Hopefully, bureaucracy will not stand in its way for much longer.