Local Manufacturing of Oilfield Chemicals- Mitigating Potential Future Disruptions While Supporting Local Content Program

Abstract

Halliburton uses the term "local content" to describe programs to develop and use local resources in providing our services in that host country. Local content requirements vary by country, but commonly include providing employment opportunities to local citizens, procurement of goods and services from within the country, manufacturing and value addition through partnerships with and development of local entities, training programs to develop the technical skills of local individuals and businesses, and carry out research and development for finding indigenous alternates of imported materials. In almost all cases, local content requirements are mandated by the laws of the countries where we operate. Adhering to and improving local content is an important part of Halliburton's commitment to support the countries in which it operates and it also brings benefits for both Halliburton and local communities. In this paper, we share a case study of how Halliburton carried out the process of localizing chemical manufacturing in Saudi Arabia, the steps taken, and support extended in developing the local suppliers. Meeting local content requirements requires precise collaboration and communication between regional and country management teams, compliance with host country laws and regulations, adherence to Halliburton company policies, and meeting the quality standards the National Operating Company which is the end user in most cases. The methodology for achieving effective localization results started with setting the right strategy and putting challenging but achievable targets. This localization initiative exemplifies company efforts to create value in every aspect of the company's business through the In-Kingdom Total Value Add (iktva) program mandated by the national operating company in the country. Having a local source of manufacturing and supply chain mitigates any disruptions like the one we saw during COVID 19 whereby the movement across borders was partially closed and supply chain globally was disrupted. Any local souring effectively diminishes the impact of any such disruptions. This initiative considered more than 50 Halliburton commercial chemical products and resulted in more than 10 successful replacements. Halliburton was able to export three products to company's operations outside Saudi Arabia. Partnering with Saudi Aramco, chamber of commerce and local manufacturers and suppliers in this program will drive additional domestic value creation to support a rapidly changing economic environment and foster future prosperity.