Wherever the Company operates, we’re committed to employing local people, working with local suppliers and developing local capabilities.
As well as being the right thing to do, we see this as a source of competitive advantage, helping us to keep costs down, improve the quality and availability of local suppliers, and build stronger relationships with local stakeholders.
In this way, we aim to make a positive and measurable contribution to the economies in which we operate.
The foundations needed to deliver in-country value
In this video, our Group Chief Executive, Ayman Asfari explains the foundations needed to deliver in-country value, and why that’s resulting in a differentiated position for Petrofac in the market.
Alongside client value and shareholder value, we consider ICV as one of the three core outcomes of our business model.
In 2018, we continued to enhance and formalise our related initiatives, and align our local employment and procurement programmes with the ICV priorities of our clients and other national stakeholders. We also continued to support suppliers through our training initiatives and our Heath, Safety, Security, Environmental and Integrity Assurance (HSSEIA) programmes.
In 2018, we purchased more than US$1.1 billion worth of goods and services across our key MENA projects. The proportion of locally sourced goods and services decreased from 50% in 2017 to 31% in 2018.
For various reasons, including the size of the country and the capability of the local supply chain, the level of procurement that comes from locally registered vendors varies. For example on our projects within the United Arab Emirates, locally-sourced goods and services accounted for 87% of expenditure during 2018. Meanwhile in Oman, local expenditure on the Rabab Harweel project was 50%. The equivalent figure in Russia on the Sakhalin OPF project was 57%, and in Kuwait on the Lower Fars heavy oil project 51%.
We continue to work towards gathering consistent data to report on the level and nature of employment on our key sites. Our aim is to understand the total number of jobs created, as well as the ratio between local and expatriate workers.
At the close of 2018, we supported almost 75,000 jobs at our project sites. Around 95% of these were through our subcontractors, the remainder being a mix of expatriate and local Petrofac employees and contractors.
The extent to which subcontractor jobs are held by locals or expatriates is determined partly by contractual requirements and partly by the availability of qualified candidates. In some countries, such as Algeria, the percentage of local subcontractor workers can exceed 85%. In others, such as UAE, it can fall below 10%.
85% of our in-country value investment has been spent through local goods and service providers
We've placed orders with more than 650 Saudi suppliers for goods and services