Local Content and Industrial Resilience in Middle East Energy Projects

Local content requirements have been a feature of procurement in the Middle East energy sector for many years. However, recently announced initiatives have highlighted how local content can be a practical tool for building stronger, more resilient supply chains.

At the Make it in the Emirates 2026 forum, ADNOC launched an Industrial Resilience Program that builds on its existing In-Country Value (ICV) framework and is intended to support a stronger UAE manufacturing base, improve supply chain reliability and give industry participants clearer visibility over future demand. The programme includes Local+, under which ADNOC EPC contractors are expected to prioritise UAE made products from approved national manufacturers in defined categories. It also includes ICV+, which gives additional ICV credit for purchases from local manufacturers.

QatarEnergy’s Tawteen programme also supports localisation in Qatar’s energy sector through supplier development and vendor engagement initiatives, whilst Saudi Aramco’s iktva programme aims to build a competitive domestic energy supply chain and has targeted retaining 75% of procurement spend in-Kingdom.

For contractors, suppliers and manufacturers, the growing focus on local content means it now needs to be considered throughout project delivery, with implications for contracts, supply chains, pricing and compliance.

Localisation and Supply Chain Risk

Local content programmes have long been seen as a way to keep more economic value in-country, create jobs and support domestic companies. Those aims still matter. But national oil companies (NOCs) are now also using local content to make their supply chains more reliable and to shape how major projects are delivered. This includes ADNOC’s Industrial Resilience Program which is aimed at reducing exposure to global supply chain disruption and encouraging local sourcing for products that can be manufactured in the UAE. 

This has a direct contractual consequence. If local sourcing is a core part of project delivery, the contract should say exactly how it works. Contracts should clarify:

• what exactly must be sourced locally; 
• whether local sourcing is mandatory or preferred; 
• who is responsible for meeting local content targets; 
• how local content will be measured; 
• what evidence of compliance must be provided; and 
• what happens if a local supplier cannot perform. 

In the sourcing process, it is also important to distinguish between:

• policy objectives; 
• tender evaluation criteria; and 
• binding contractual obligations. 

A localisation commitment that improves a bid score does not automatically become a legally enforceable obligation unless the contract clearly says so.

Approved/Preferred Suppliers

NOC localisation programmes can involve approved or preferred suppliers. ADNOC’s Local+ initiative encourages EPC contractors to prioritise "Made in the Emirates" products from approved UAE manufacturers where technical and commercial requirements are met. ADNOC has identified an initial group of local manufacturers under its Local+ initiative, with the list expected to expand over time.

Where contractors are expected or encouraged to engage NOC approved suppliers, the parties to a relevant contract may wish to consider how the contract deals with situations where an approved supplier cannot deliver on time, is no longer commercially viable, or is unable to meet the required technical standards. This may include a clear substitution process explaining when suppliers can be replaced, whose approval is required, and whether substitution affects local content compliance.

Avoiding Over-Commitment

With the growing focus on local content, a contractor may seek to improve its bid by committing to local sourcing or by partnering with domestic manufacturers. However, this presents the risk of over-commitment. A contractor may promise a high level of local content but later find that the relevant supplier does not have the capacity, certification, competitive pricing or delivery timeline needed for the project.

Before making local content commitments, contractors should check:

• whether the local supplier can meet the specification; 
• whether it has the required certifications; 
• whether it can deliver within the project schedule; 
• whether its pricing is fixed or subject to change; and
• whether the same commitments can be flown down to subcontracts and purchase orders. 

Where local content commitments at bid stage become binding contractual obligations, contractors should ensure that they have robust flow-down rights against their suppliers.

Importance of Flow-downs

Local content obligations often sit in the main contract, but delivery happens via subcontractors and suppliers. This means the main contractor may remain responsible to the NOC for obligations performed further down the supply chain.

This is why the consideration of flow-downs is crucial. If the main contract includes local content related obligations, contractors should ensure those requirements are reflected in its subcontracts and purchase orders. Otherwise, the contractor may bear liability towards the NOC without effective recourse against the supplier or subcontractor responsible for any failure to comply with requirements.

Relevant flow-down provisions may include:

• local sourcing obligations; 
• reporting and audit requirements; 
• record keeping obligations; and 
• remedies for failure to fulfil obligations. 

Evidence of compliance is also likely to be critical in relevant contracts. Where a contractor’s local content position depends on subcontractors or suppliers, the contractor may need clear rights to obtain, verify and rely on supporting information, including purchase orders, invoices, certificates and supplier records. If inaccurate information is passed up the supply chain, the contractor may still remain responsible under the main contract.

Conclusion

ADNOC’s recent announcements show how local content is becoming part of a wider industrial resilience strategy with similar themes seen across other localisation initiatives in the Middle East energy sector.

For contractors, suppliers and manufacturers, this means local content needs to be carefully considered from the beginning to the end of a project. It should be reflected in bid strategy, supplier selection, subcontracting, pricing, scheduling and compliance.

Contractors in the market should be prepared to show that they can deliver while also meeting local content requirements in a realistic, measurable and properly documented way.