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Aramco Announces Expansion of its Flagship Localization Program

Saudi Aramco announced the expansion of its flagship program to increase local content and boost domestic supply chains. (Aramco)
Saudi Aramco announced the expansion of its flagship program to increase local content and boost domestic supply chains. (Aramco)
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Aramco Announces Expansion of its Flagship Localization Program

Saudi Aramco announced the expansion of its flagship program to increase local content and boost domestic supply chains. (Aramco)
Saudi Aramco announced the expansion of its flagship program to increase local content and boost domestic supply chains. (Aramco)

Saudi Aramco announced on Monday the expansion of its flagship program to increase local content and boost domestic supply chains.

It is a significant milestone in the company’s In-Kingdom Total Value Add (IKTVA) program, which marks its fifth anniversary on December 1, said the oil giant in a statement.

The expansion includes plans for new international partnerships and the establishing of companies through an Industrial Investment Program (IIP), which is linked to the development of Aramco's business.

Aramco has signed Memorandums of Understanding with Shell & AMG Recycling BV (AMG) from the Netherlands; Chinese firms Suzhou XDM, Shen Gong, Xinfoo and SUPCON; and Posco from South Korea.

These strategic collaborations pave the way for the launch of new businesses across multiple innovative growth sectors, including steel plate manufacturing, industrial 3D printing, digital equipment manufacturing, energy management and control; catalyst manufacturing and recycling, and advanced chip and smart sensor manufacturing.

“These new collaborations reflect Aramco’s commitment to increasing the company’s reliability and operational efficiency, as well as its commitment to further enhancing the Kingdom’s commercial ecosystem and increasing employment and development opportunities for talented Saudis,” said the statement.

Since IKTVA’s launch, Aramco’s local content index has increased from 35% at the end of 2015 to 56%.

Aramco’s President and Chief Executive Officer, Amin Nasser said: “Today’s announcement is a step change in Aramco’s pioneering IKTVA program. which was launched in 2015. Despite the uncertainties surrounding the global economy, we have sustained our focus on our long-term goals to enable growth and development for a thriving ecosystem and a more diversified Saudi economy.

“These new partnerships will contribute to advancing innovation, sustainability and enhance the scale of reliability in our business ecosystem and, in addition, benefit companies operating in the Kingdom's vast energy and chemicals sector.

“These partnerships will also have a strong focus on new technologies, by maximizing our investments in non-metallic materials and the circular carbon economy, as well as the development of talented Saudis in communities where we operate,” he stated.

Aramco’s Senior Vice President of Technical Services, Ahmad Al-Saadi said: “Aramco has a long history of supporting the local business ecosystem. Our IKTVA program is a manifestation of our commitment to this and the resulting investments, either directly by Aramco or indirectly by suppliers, have promoted localization, contributed to Aramco’s supply chain resilience and enhanced Saudi Arabia’s economic growth.

“Our planned partnerships will continue this journey and advance the Kingdom’s economic progress. We intend to act as an enabler, supporting the growth of national champions. Today we are expanding our flagship program, and expect more partnerships in the future,” he added.

Saudi Aramco has concluded MoUs with the following companies:

- POSCO: an agreement to collaborate on evaluating the feasibility of constructing an integrated steel plate manufacturing plant in Saudi Arabia.

- Suzhou XDM 3D Printing Company Ltd: an agreement to collaborate on industrial 3D printing technologies and development in Saudi Arabia.

- SHEN GONG New Materials (Guang Zhou) Co. Ltd: an agreement to focus on developing control systems technologies for LED lighting, energy management and intelligent control.

- XINFOO Sensor Technology Company Limited: an agreement to explore opportunities in chip manufacturing and related technologies.

- Shell & AMG Recycling B.V.: an agreement to explore collaboration to develop plans for a state-of-the-art regional hub for the recycling of gasification ash and reclamation of spent catalyst, in addition to providing sustainable solutions.

- Zhejiang SUPCON Technology Co., Ltd: an agreement to explore potential joint investment opportunities in Saudi Arabia for the services and manufacturing value chain.

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Gulf Petrochemical Sector Faces Mounting Challenges Amid Global Shifts

A SABIC facility in Jilin, China (Company photo)
A SABIC facility in Jilin, China (Company photo)
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Gulf Petrochemical Sector Faces Mounting Challenges Amid Global Shifts

A SABIC facility in Jilin, China (Company photo)
A SABIC facility in Jilin, China (Company photo)

Over the past five years, the Gulf’s petrochemical industry has found itself at a critical juncture. A mix of rapid geopolitical developments, the lingering effects of the COVID-19 pandemic, and a slowdown in global economic growth, particularly in key markets like China and other parts of Asia, has disrupted longstanding business models and cast uncertainty over the future of the sector.

Industry experts and analysts, speaking to Asharq Al-Awsat, pointed to a convergence of four primary challenges facing Gulf petrochemical companies today. Among them are weak innovation strategies, limited domestic downstream capabilities, ongoing geopolitical volatility affecting supply chains, and increasingly stringent global environmental regulations on hydrocarbon-based products.

Fares Al-Qadheebi, an expert in international strategic partnerships and a member of the Saudi Economic Association, stressed that Gulf petrochemical firms must undergo a strategic transformation to remain viable.

He argued that the industry’s traditional reliance on government-subsidized feedstock is no longer sufficient in an evolving market landscape. For decades, these subsidies provided a competitive advantage. However, with subsidies gradually being phased out or restructured, companies now face mounting pressure to pivot toward higher-value, specialized products that align with strategic industries and evolving global demand.

The challenge, Al-Qadheebi said, lies in the sector’s historically low investment in research and development. Financial disclosures from several companies reflect limited R&D expenditure, resulting in a lag in innovation and product diversification. This hampers the ability of Gulf producers to shift from commodity chemicals to advanced materials that could drive future profitability.

At the same time, the region’s domestic manufacturing sector remains underdeveloped. Despite various industrial localization initiatives, Gulf countries continue to rely heavily on export markets, primarily China and India. This overreliance has left companies vulnerable to external shocks and market shifts, making it difficult to redirect surplus production into local value-added industries.

Geopolitical uncertainty is compounding the problem. Disruptions to global supply chains due to regional conflicts and shifting trade alliances have introduced logistical challenges and pricing volatility. This has forced some international buyers to seek alternative suppliers in more stable regions, undermining long-term relationships and jeopardizing the sector’s global competitiveness.

The rise of protectionist policies, particularly in the United States, has also led Gulf companies to reconsider their exposure to the American market and explore options such as relocating parts of their operations overseas.

Adding to the pressure are global environmental policies that increasingly target carbon-intensive products. Gulf producers are being pushed to develop low-emission technologies and environmentally compliant alternatives. While necessary, such changes significantly increase development and production costs and complicate market access.

Financial analyst Tareq Al-Atiq noted that these combined pressures have eroded profitability across much of the sector, with few signs of a swift recovery. He stressed the need for mergers, strategic alliances, and investments in carbon capture technologies to reduce operating costs and reposition the industry in growth markets, particularly in emerging economies with rising demand for plastics, fertilizers, and other petrochemical derivatives.

Looking ahead, experts suggest that the Gulf’s petrochemical giants must work more cohesively - potentially in an OPEC-style alliance - to coordinate production, innovation strategies, and market expansion efforts, or risk falling behind in an increasingly competitive global landscape.