February 28 th, 2010 Declaimer The information contained herein is made available to the public by Saudi Aramco, and is provided as is. Saudi Aramco makes

Creating an Oil and Gas Cluster

in Saudi Arabia

February 28th, 2010

DeclaimerThe information contained herein is made available to the public by Saudi Aramco, and is provided “as is”. Saudi Aramco makes no representations or warranties, express or implied, as to the correctness, completeness, or use of this document or the information therein by any party for any purpose whatsoever. Neither Saudi Aramco nor any of its affiliates shall be liable for any direct, indirect, incidental, consequential, or punitive damages arising out of or in any way connected with the information herein. Use of, or reliance on, this document or the information therein does not create any binding legal or other obligations on Saudi Aramco towards any other party. Reference herein to any specific organization or company does not constitute or imply Saudi Aramco’s endorsement or recommendation of, or preference towards, such entity.

© 2010 Saudi Arabian Oil Co. All rights reserved.

Outline

Background

Functions…Methodology

Investment Opportunities

SA new initiative

BackgroundFunctions

MethodologyInvestment Opportunities SA new initiative


Economic Decisions

Best In Class

Commercial

Support Kingdom’s Goals

Promote Local Economy

Community Out-Reach

National Reliable Long Term

Supply

Spare Capacity & Flexibility

International

Saudi Aramco Strategic Dimensions

FunctionsMethodology

Investment Opportunities SA new initiativeBackground


Population & Employment Challenge

Population Doubled in 15 years Will grow to 40 millions by 2020

0

10

20

30

40

1980 2000 2005 2010 2015 2020

Population growthMillion

From 0 to 18 years

More than 30 years

19 to 30 years

Population distribution

Population distribution 50% under the age of 18 years 70% under the age of 30 years

Employment The need to create 5 millions jobs by 2020 The need for the development of human

resources




UpstreamRefined

Products Petro-

chemicals Heavy

ManufacturingLight

Manufacturing

0.7 0.5 5 15Added Jobs

$ Millions

0

20

40

60

80

100

SME’s Value Addition




SME’s Value Addition

Enhance local supply chain and reduce costs to local

consumers

Expand and diversify national economy

Increase Gross Domestic Product

Transfer of technology and best practices

Maximize Private Sector participation

Reduce reliance on imports




Promote Investment Opportunities

Expand Existing and bring new Capabilities

Focus on Locally Made Products

Business Development

Provide Related Available Data

Explore New Markets

Building Database about Local Market Manufacturing Capability

Market Intelligence

Coordinate Initiatives with other SA Organizations

Facilitate New Manufacturing Approvals

Explore New Opportunities

Internal Relation External Relation

Support Investors to Utilize Available Resources

Coordinate Government & Semi-government Agencies

Function

Background Investment Opportunities SA new initiativeFunctions

Methodology


Local Investments Success Ingredients

Public and Private Sectors

Public Sector Provide Loans through Public Funds Secure Industrial Lands Develop Technical Skills Improve Regulations and Procedures

Private Sector Targets Technical & Financial

Investments to Increase Competitiveness of the Region

Saudizes Workforce Plans with Long Term Investment Vision Adopts Local Innovation and

Development Strategy

Saudi Aramco

Support Qualified Local Goods and Services through Purchasing

Provide Information for Feasibility Studies

Coordinate Expediting the Process for Registration and Approval

Facilitate Investor needs with Government and Semi-government Agencies


Methodology


Saudi Aramco

Investor

ExecutionPlan

PartnershipDetails

Shape the

Business

Develop &Promote

IdentifyOpportunity

Operate & Scale

Constr-uction

Provide the information necessary to make an initial feasibility study

Provide technical assistance required for qualification

Following up with the established execution plan

Investment Development Methodology


Methodology


Current Activities

Activities # Ventures $ MM Job Creation

Chemicals 18 649 986

Drilling Equipment 8 191 742

Electrical & Instrumentation 19 149 1,211

Fabricated/Structural Steel 15 640 5,157

Services 3 52 90

OCTG & & Seamless Pipes 6 1,857 2,170

Pipes & Pipe fittings 13 553 1,093

Rotating Equipment 9 111 755

Valves 13 77 520

Forging & casting 3 45 182

Total 107 4,322 12,906


Methodology


Current

70%

30%

70%

30%

Desired

Local Manufacturing Development

Out Of Kingdom

In Kingdom

BackgroundFunctions

MethodologySA new initiativeInvestment Opportunities


Source: Saudi Aramco’s Material Supply Survey, May 2007

Access to Utilities

Access to Land

Access to Labor

Governance

Customs & Trade Regulation

Access to Transportation

Access to Technology

Access to Finance

Severe Obstacle Major Obstacle Moderate Obstacle

0% 20% 40% 60% 80% 100%

Investment Impediments…

Saudi Aramco’s Material Supply’s Survey identified local investors’ view of impediments to expanding the Kingdom’s manufacturing sector …

BackgroundFunctions



SR Million

0 400 800 1200 1600 2000

• Ball

• Gate

• Globe

Targeted Commodities

• Flow Instrumentation

• DCS, ESD&PCS• RTU


• Motors

• Batteries

• Lighting Fixtures


• Xanthan Gum

• Calcium Bromide

• Potassium Chloride

• Potato Starch

Targeted Commodities• Shell & Tube

• HE

• Air Coolers


• Tee

• Elbow

• Flanges


• Specialized Pressure Vessels (desanding, gravity separation, etc.)


• Pumps

• ESP


• Gas & Steam Turbines

• Process Compressors


• FCC

• Molecular Sieve


Valves

Instrumentations

Electrical

Drilling Chemicals

Heat Transfer Equipment

Pipe Fittings

Vessels

Pumps

Turbines & Compressors

Catalysts

90%

81%

38%

90%

54%

93%

95%

90 %

95%

61%

Average Annual Purchases of Saudi Aramco

Out Of Kingdom

In Kingdom

Local Manufacturing Development

BackgroundFunctions



Targets approved manufacturers

The local facility must meet minimum requirements set by Saudi Aramco Manufacturing Process Final Product

Saudi Aramco will provide commitment to buy for a period of time

Saudi Aramco will facilitate: Investment License Industrial Land Industrial Loans

Local Manufacturing Development Program

BackgroundFunctions

MethodologyInvestment Opportunities SA new initiative


Thank you


Documents

February 28 th, 2010 Declaimer The information contained herein is made available to the public by Saudi Aramco, and is provided as is. Saudi Aramco makes