Aramco signs 59 agreements worth $11b to boost manufacturing

Nov 23, 2022 by Energy Connects
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The 59 CPAs cover multiple strategic commodities, such as drilling chemicals, wellheads, switchgears, vibration monitoring systems, pipes, compressors, structure steel, fittings and flanges, and air-cooled heat exchangers.

Aramco has signed 59 corporate procurement agreements (CPAs) with 51 local and global manufacturers, with potential to create 5,000 new jobs in the Kingdom of Saudi Arabia over the next decade.

The agreements, valued at $11 billion, are expected to reinforce Aramco’s robust supply chain and result in the development of materials manufacturing facilities in the Kingdom, the Saudi energy behemoth said.

The 59 CPAs cover multiple strategic commodities, such as drilling chemicals, wellheads, switchgears, vibration monitoring systems, pipes, compressors, structure steel, fittings and flanges, and air-cooled heat exchangers.

Among the companies signing the agreements were Baker Hughes, Cameron Al Rushaid, Halliburton, SLB, and TechnipFMC. The CPAs fall under a strategic pillar of the Aramco in-Kingdom Total Value Add program (iktva), wherein they are used to establish long-term agreements and commitments with supplier partners.

“Our significant investments in a network of accomplished local suppliers strengthens Aramco’s resilience, ensuring that we remain the world’s most reliable energy company. We are also extensively building commercial ecosystems globally by partnering with some of the world’s top energy, logistics, and manufacturing companies,” Ahmad A. Al-Sa’adi, Aramco Senior Vice President of Technical Services, said in a statement.

According to Mohammad A. Al-Shammary, Aramco Vice President of Procurement and Supply Chain Management, the CPA holders will be Aramco’s future strategic manufacturing partners for the commodities, and the agreements further broaden the localisation infrastructure across the Aramco network.

The CPAs aim to establish a framework for mutual collaboration and joint success. CPA holders share Aramco’s vision for establishing a world-class supply chain in Saudi Arabia. Under their CPA agreements, supplier partners agree to establish local facilities, transfer technology, perform local research and development, and develop the local workforce and supply chain, while gaining preferred status with Aramco, Aramco joint ventures, and affiliates.

Since the launch of the CPA pillar, Aramco has entered into more than 100 CPAs. These strategic agreements have driven localization in critical commodities such as drill bits, downhole, valves, pressure vessels, and process automation systems. In addition, some CPA holders now export materials globally while providing Aramco with the capacity to embark on the most robust project portfolio in the company’s history.

Since its launch, the iktva program has contributed more than $130 billion to the Kingdom’s gross domestic product, while creating more than 100,000 supply chain jobs for Saudis. The program has matured and grown stronger through some of the industry’s most challenging times, while bringing reliability and sustainability to Aramco’s supply chain.

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