Aramco's doors open for Chinese businesses
Posted: 06 November 2006
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Saudi Aramco executives Monday hosted a symposium attended by almost 80 Chinese companies involved in contracting and manufacturing. The goal of the symposium was to inform the companies about the extraordinary opportunities open to them through Saudi Aramco's massive capital programs.
Saudi Aramco's vice president of Project Management, Ali A. Al-Ajmi, opened the session by recalling the centuries-long history of trade between China and the Middle East .
 "Your companies have a great deal to offer in terms of manufacturing, engineering and construction expertise," he said. "The opportunities available to you in Saudi Arabia 's mega projects are huge. We believe that strengthening our economic ties can only profit both of our cultures."
After an introductory presentation about the company's scope of operations, Nabilah M. Al-Tunisi, manager of Saudi Aramco's Project Support and Controls Department, laid the groundwork for the symposium by detailing the projects outlook for the Gulf region, the largest part of which is Saudi Arabia , driven principally by its oil- and gas-related industries.
Al-Tunisi noted that worldwide demand for energy has been growing steadily, with China , India , the Middle East and the United States leading the increase. This rise in demand, in turn, leads to an increased call for oil from the Gulf, she said.
"The global call on the oil-producing countries for a stable energy supply has created opportunities to continue with the robust economic growth in the Gulf Region for the next several years," Al-Tunisi said.
Saudi Arabia leads the region in capital project investments. "The total project outlook for Saudi Arabia is valued at $339 billion," Al-Tunisi noted, "of which 64 percent, or $216 billion, are concentrated in the oil, gas and petrochemical sectors."
When it comes to Saudi Aramco's projects, Al-Tunisi said the company is involved in an expansion program of project investments that amount to about $45 billion, including five new oil production facilities that represent a crude oil capacity increase of almost 3 million barrels per day - the largest in Saudi Aramco's history.
She pointed out that Saudi Aramco's capacity increase alone is larger than the total production of individual oil producers such as the United Arab Emirates , Nigeria , Kuwait , Iraq , Algeria , Libya , Brazil , the United Kingdom and others.
Al-Tunisi outlined the five crude oil mega projects:
• Khurais Crude Increment Program: 1.2 million bpd. To be fed by Khurais, Abu Jifan and Mazalij oil fields. The project includes a residential/industrial complex for 1,200 people, an airstrip with aviation support facilities, fire station, utilities and telecommunications.
• Manifa Crude Increment Program: 900,000 bpd. Includes onshore and offshore facilities. Includes more than 40 km of causeway linking shallow-water drilling islands.
• Khursaniyah Crude Increment Program: 500,000 bpd. To be fed by Abu Hadriya, Fadhili and Khursaniyah fields.
• Shaybah Crude Increment Program: 250,000 bpd increase over current 500,000 bpd capacity.
• Nu'ayyim Crude Increment Program: 100,000 bpd.
Hisham A. Al-Rammah, manager of Saudi Aramco's Projects & Strategic Purchasing Department, delivered a presentation which provided Chinese business representatives additional information about opportunities for mutually beneficial commercial relationships with Saudi Aramco.
Al-Rammah pointed out that Saudi Aramco's direct spending amounted to $3.5 billion in 2005, and was forecast to increase to $4.5 billion this year, and $5 billion in 2007. From 2007 to 2011, he said, the company's commodity forecast amounts to $40 billion.
Al-Rammah explained Saudi Aramco's strategic supply chain model. "Our principal model is to competitively bid long-term agreements with price adjustment mechanisms using indexing, where appropriate, to maximize our procurement leverage," he said. "For commodities where lead times and pricing are volatile, such as line pipe, we have adopted reserve capacity agreements that include forecasts with commitments and price adjustment frameworks."
For materials with more predictable demand patterns, Al-Rammah said, long term agreements are concluded which call for a supplier-managed inventory arrangement. For complex engineered rotating equipment, Saudi Aramco will focus on concluding other innovative supply chain models.
The reason Saudi Aramco is courting Chinese business, Al-Rammah said, is due to their competitiveness in the global market, a desire to tap China's rapidly developing and impressive capabilities, and to build on existing partnerships with Chinese companies. To maximize these opportunities he noted Saudi Aramco's desire to forge new mutually beneficial relationships with Chinese companies.
To enhance global procurement capabilities, Saudi Aramco has recently established a permanent presence in China . The Shanghai office forms a key link with sister offices located in the Netherlands , Tokyo , Houston and Kuala Lumpur .
Al-Rammah summarized the supplier registration process in order to encourage the business representatives attending the event to consider doing business with Saudi Aramco. "Saudi Aramco represents a major opportunity for Chinese manufacturers," he concluded. |
