Year in Review: Petro Rabigh
In the December 2018 edition of Supply Chain Digital, we interviewed Michael Gustafson, General Manager of Material, Procurement and Contracts at Petro Rabigh. With 2019 coming to a close, we reflect on the in-depth feature with the petrochemical company one year on.
The Kingdom of Saudi Arabia is a country driven by change. With the incoming Saudi Vision 2030 propelling all companies operating in the country to switch up operations, it’s certainly an exciting time for Kingdom. At its core, the Saudi Vision 2030 wants the Kingdom to reduce its reliance on oil and diversify its economy. In order to outline its commitment to Crown Prince Mohammad bin Salman’s vision, Petro Rabigh has announced the imminent arrival of The Petro Rabigh Phase II expansion project, which will offer an even more diversified product slate with the introduction of a range of new high added value petrochemical products.
The cost of the project is expected to total $9.4bn with capital project debt funding. “We’ve almost finished Phase II to expand our business. It’s like you’re running on a treadmill and the speed is set at a six-minute mile but you're used to running an eight-minute mile,” explains Gustafson. “People think of procurement as being some sleepy, back office support group. But, it’s not. You're actually on the front line and if this spare part, chemical additive, or catalyst doesn't arrive on time, you could shut down a facility.”
With procurement clearly a key area of focus for Petro Rabigh, the company has established three different departments with contracting, material handling and procurement all housed under the same roof. Petro Rabigh’s current procurement strategy is to accelerate its existing arrangements. “In general, the majority of our strategy is to push our agreements and expand into MRO and chemical agreements,” he explains. “This is opposed to the ongoing spot buying that takes place, which decreases the time it takes to turnaround, as well as the cycle time.”
Do you want to read the full profile? Check out the December 2018 edition of Supply Chain Digital.