Lagging behind: private firms contributing to the development of the hydrocarbons sector will have to meet international standards.(OIL SERVICES)

Riyadh is keen to encourage local companies to participate in the oil sector, and is looking abroad for examples. Research by the Petroleum & Mineral Resources Ministry to this end is expected to be complete in early 2007.

The year-long study involved a ministry fact-finding team visiting six oil producing states--Canada, Egypt, Malaysia, Norway, Venezuela and Indonesia--holding 75 meetings with clients, investors, contractors and project managers on the extent of local sector participation in their respective states. It also spent September and October interviewing Saudi Aramco and international oil companies on the same issue.

"We carried out a high-level mapping of existing local content and are now doing a detailed analysis," Yahya Shinawi, the ministry's director-general at the Eastern Province branch, said at the Saudi Energy Forum in Dammam in late November.

The findings are unlikely to come as a big surprise--less than 20 per cent local contribution levels in Saudi Arabia, compared with 40-55 per cent in Norway and Canada.

"We admit that local content [in the kingdom] is not effective, but there are reasons for it. Inadequate training, poor English language skills, shortage of qualified personnel and failure to meet technical qualifications are major hindrances," he said.

Concerns

Shinawi's concerns were shared by Saudi Aramco's vice-president for materials supply, Esam al-Mousli. "There are both problems and prospects," he said, adding that a recent study by the Riyadh Chamber of Commerce & Industry indicated 55 per cent of local companies did little to invest in research and marketing.