The world’s largest oil-exporting company Saudi Aramco has signed its first long-term service agreement (LTSA) with Siemens Energy, the German-based leading energy technology company, to secure a range of turbines and generators for four major oil fields.
The 15-year contract is expected to enable Aramco to improve reliability, efficiency, and availability of power supply, thereby safeguarding oil and gas production. The agreement will also allow Siemens Energy to expand its localization efforts by developing high-tech industry and training a skilled local workforce to raise domestic capabilities in the Kingdom, whilst benefitting the regional economy. The value of the contract was not disclosed.
“Siemens Energy is a strategic partner and a trusted service provider, that can ensure reliable power supply at these major oil fields, helping improve operational excellence and continuously enhancing the performance of our strategic assets,” says Mohammad Al-Shammary, vice president of Procurement and Supply Chain Management at Aramco.
Commenting on the agreement the vice president of generation and industrial service, Middle East and North Africa at Siemens Energy, Gianluigi Di Giovanni says, “The long-term service agreement is expected to help achieve the highest efficiency, reliability and availability of Aramco’s plant, with optimized parts management and with a core local team dedicated to the plants’ needs.”
Last year, Saudi Aramco signed partnership agreements worth more than $21 billion with international companies to work across its value chain.
Saudi Aramco through its ‘In-Kingdom Total Value Add initiative’ (IKTVA) looks to baseline, measure, and support increased levels of localization and aims to meet at least 70 percent of its procurement spending from Kingdom’s companies by 2021.
Earlier this year, Saudi Arabia said it will stop awarding contracts to any company that has its regional headquarters outside the country from 2024 to incentivize localization of business and derive more value from their foreign partners and Siemens is among a number of companies that said it would move its regional headquarters to the Kingdom.