In a strategic move to advance its ‘In-Kingdom Total Value Add’ (IKTVA) program, Saudi Aramco has inked a new collaborative agreement with the General Authority for Small and Medium Enterprises (Monsha’at), aiming to boost the competitive abilities of these businesses. The partnership looks to open the door for SMEs to vie for investment opportunities worth approximately $16 billion (60 billion SAR).
Revealed by Aramco, the company annually allocates around $45.9 billion (170 billion SAR) for goods and services procurement. The agreement was signed against the backdrop of the ‘Biban Eastern Forum’ inauguration, a four-day event held at the Dhahran International Exhibitions Center.
The signatories included Aramco’s Vice President of Procurement and Supply Chain Management, Engineer Mohammed Al-Shammary, and the Governor of Monsha’at, Engineer Saleh Al-Rashid. The signing ceremony was graced by the presence of Eastern Province Prince Saud bin Nayef bin Abdulaziz, his deputy Prince Ahmed bin Fahd bin Salman bin Abdulaziz, and Dr. Majid Al-Qasabi, the Minister of Commerce and Investment and Chairman of Monsha’at.
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Engineer Al-Shammary articulated that the agreement’s primary goal is to fortify cooperation with Monsha’at to empower kingdom-based SMEs through the enhancement of the investment climate and provision of suitable investment opportunities within the oil and gas sector.
He highlighted that the pact will facilitate training and qualification of SMEs, streamlining their operations with Aramco both directly and indirectly. Al-Shammary emphasized that Aramco has identified over 140 investment opportunities, collectively valued near $16 billion, available for SMEs to supply goods and services required by the company’s operations, thereby fostering the localization of innovation and modern technologies across several sectors pertinent to the oil and gas industry.
“We recognize the significant challenge in establishing a local content base in the energy sector, which demands globally competitive capabilities. Through the IKTVA program, and the exploration of opportunities therein, we are on the path to developing our workforce, transferring technology, and enhancing research and development. This accelerates our journey towards a more effective local content contribution to an inclusive and sustainable economy,” Al-Shammary said.
He also noted that the IKTVA program is designed to bolster local and foreign investments through mutually beneficial cooperative relationships. Aramco’s commitment to spending around $45.9 billion on goods and services annually plays a pivotal role in activating local sourcing and technology localization, enriching the local content ecosystem with a more sustainable and responsive supply network.
The SME sector stands as a cornerstone in achieving the objectives of the IKTVA program. It encourages Aramco’s pursuit of a global supply and procurement ecosystem that is accessible and operable locally, distinguished by high reliability, and an advanced level of innovation, aligning with the company’s strategic aim of becoming the leading global integrated energy and petrochemicals enterprise.
Previously, during the IKTVA forum in November, Aramco signed several memoranda of understanding and agreements with suppliers amounting to about $26.6 billion (100 billion SAR), encompassing 31 commercial collaborations, many of which will directly influence the IKTVA program. Currently, Aramco allocates 51% of its materials and services spending locally.
Participation in the IKTVA program is mandatory for all of Aramco’s suppliers, with the program targeting 70% localization of content, generating thousands of job opportunities, and aiming to export 30% of the local energy goods and services production by 2021.
