In a significant development for its domestic economic strategy, Saudi Arabian Oil Company (Aramco) has announced that its flagship In-Kingdom Total Value Add (iktva) initiative has achieved a 70% local content level in its procurement spending. The state-owned energy giant has now established a more ambitious target, aiming to elevate this proportion to 75% by the year 2030.
Economic Impact and Strategic Goals
The iktva program, launched in 2015, is a cornerstone of Saudi Arabia's broader Vision 2030 economic diversification plan, which seeks to reduce the kingdom's historical reliance on hydrocarbon revenues. By mandating increased sourcing of goods and services from within the country, the initiative is designed to stimulate non-oil industrial sectors, foster technological transfer, and build a robust domestic supply chain. Aramco reports that the program has contributed a substantial $280 billion to Saudi Arabia's Gross Domestic Product (GDP) and has successfully attracted approximately $9 billion in foreign direct investment.
Job Creation and Global Engagement
Beyond capital investment, the initiative has been a major engine for employment. The company credits iktva with the creation of more than 200,000 jobs, encompassing both direct and indirect employment opportunities. To sustain this momentum and engage the global supplier community, Aramco hosted eight international supplier forums across the world in 2025, supplementing its regular domestic events. This outreach has yielded over 350 investments from firms based in 35 different countries.
The program's granular focus is evident in its identification of more than 200 specific localization opportunities across 12 key industrial sectors over the past decade. These segments represent an annual addressable market worth an estimated $28 billion. A tangible outcome of this effort has been the establishment of first-time domestic production for 47 strategically important products, enhancing national self-sufficiency.
Operational Realities and Challenges
Aramco's Chief Executive Officer, Amin H. Nasser, characterized the impact of iktva as "transformational," noting that it concurrently strengthens the company's "operational reliability." It is crucial to understand that the local content metric is not a measure of workforce nationality but is calculated based on the value of procurement spending directed to Saudi-based businesses. To qualify for contracts, international suppliers are often required to form partnerships with local firms, relocate certain manufacturing processes, or establish in-country service capabilities.
However, the path forward is not without its hurdles. The company itself has acknowledged significant uncertainties that could affect its targets and strategy. Variables such as fluctuating global oil prices, broader economic trends, evolving regulatory frameworks, and competitive pressures may lead to outcomes that diverge from current projections. Furthermore, building a sophisticated, homegrown supply chain for complex oil and gas equipment is a long-term endeavor; any delays or quality assurance issues can immediately impact major project timelines.
Regional Context and Future Focus
Aramco is not alone in leveraging procurement power for economic development. Neighboring Abu Dhabi National Oil Company (ADNOC) operates a similar program, known as In-Country Value (ICV), with parallel objectives to boost local spending, expand the indigenous supplier base, and cultivate national talent. This regional trend underscores a strategic shift towards retaining more economic value within hydrocarbon-producing nations.
The immediate focus for Aramco and its suppliers will now shift to the pace of execution. Key questions revolve around the speed at which new capital is deployed into priority industrial sectors and whether newly established manufacturing facilities can achieve their cost competitiveness targets once operational. The industry will be closely monitoring the progression from the current 70% benchmark to the 75% goal set for 2030. With this procurement drive now deeply embedded in Saudi industrial policy, the elevated target sets a higher bar, requiring manufacturers to critically assess both market opportunities and the evolving capabilities of the Saudi industrial landscape.
