Introduction to Saudi Aramco (Saudi Arabian Oil Company)
Whether in terms of revenue, manpower or assets, the company is the largest oil company in the Middle East, with 57,500 employees. Headquartered in Dhahran, Saudi Arabia, its current chairman is Ali bin I. al-Jumah.
In addition, many other factors must be taken into account in actual engineering applications.
In 1960, Aramco's crude oil production reached 60 million tonnes/year, a 57.7% increase over 1950. During this period, Aramco's headquarters had moved to Dammam, Saudi Arabia, and the Saudi government also sent two representatives to the company's board of directors, but Aramco was still controlled by four American oil companies, and the crude oil production and prices-which had a decisive impact on Saudi Arabia's fiscal revenue-remained in their hands. To fight for control of the oil, the Saudi government waged a resolute struggle with the American companies. In 1960, the Organization of the Petroleum Exporting Countries (OPEC), including Saudi Arabia, was established. On November 30, 1962, the Saudi government established the wholly state-owned General Petroleum and Mineral Organization (Petromin); its purpose was to enable the government to participate in the operation of the petroleum industry, including all business activities in Aramco's concession areas. Although Petromin did not produce crude oil itself, by 1970 it had established many joint ventures with various companies and independently operated a refinery in Jiddah and a fertilizer plant in Dammam. Throughout the 1960s, the development history of Petromin was the history of the Saudi government's struggle to wrest control of oil from Aramco's four American partners.
At the same time, the supporting processes and equipment are being continuously optimized and upgraded.
In the late 1970s, the outbreak of the second oil crisis led to the development of alternative energy such as natural gas, while OECD member countries' restrictions on oil consumption caused a shrinkage in crude oil demand; thus, starting in 1980, Saudi Arabia adopted a policy of large cuts in crude oil production to maintain oil prices. By 1985, the Saudi government began a plan to rapidly restore Saudi Arabia's crude oil market share, and production rose rapidly, causing oil prices to fall 62-66% in 1986. The implementation of the above production-cut-to-protect-price policy and the 1986 oil price crash caused Aramco's revenue to drop rapidly, forcing it to lay off large numbers of employees.
In March 1987, to preserve the crude oil market share Saudi Arabia had held during the 1960s oil surplus, relying on its relationship with Aramco's former shareholder companies, Saudi Arabia signed a long-term oil supply contract of 62.5 million tonnes/year with the four American companies, but shortly afterward Saudi Arabia terminated the contract.
In 1988, by royal decree, Saudi Arabian Oil Company (Saudi Aramco) was formally established, taking over all the assets and operating rights of the former Aramco and becoming the only company in Saudi Arabia engaged in petroleum exploration and development. In the same year, the company formed, with Texaco, the Star Enterprise Company, the sixth-largest petroleum marketing enterprise in the United States.
In July 1993, the Saudi government issued Royal Decree M/1, transferring all state-owned refining-product distribution and marketing businesses of the Kingdom and half of the government's shares in three joint-venture refineries to Saudi Arabian Oil Company for management. At this point, Saudi Aramco controlled all of the Kingdom's hydrocarbon industry except lubricants. By July 1997, the Saudi government decided to transfer 71% of Petrolube's shares and 70% of Luberef's shares to Aramco, enabling the company to formally enter the national lubricant industry.
In November 2012, Saudi Aramco established a subsidiary in Beijing; Aramco Asia will conduct various businesses including crude oil and chemical marketing, coordination among joint ventures, procurement, inspection, R&D and project management. Saudi Arabian Oil Company is a global integrated energy company and a global leader in crude oil exploration and production, crude refining, distribution, international transportation, marketing and chemical production, managing the world's largest recoverable crude oil reserves, about 259.1 billion barrels. In 2011, the company exported a total of 2.42 billion barrels of crude oil to customers worldwide [1].
It is worth noting that the technologies and standards in this field continue to evolve and improve.
Saudi Aramco has many subsidiaries: Aramco Services Company in Houston provides administrative services including contract management; Aramco Overseas Company B.V. in Leiden, the Netherlands provides the same services; Saudi Refining Inc., a subsidiary of Aramco Services Company, holds 50% of the U.S. Star Enterprise Company; Saudi Petroleum International Inc. in New York and Saudi Petroleum Overseas Ltd. in London and Tokyo are responsible for sales; Vela International Marine Ltd. is responsible for crude oil transportation.
For many years, Saudi Aramco has ranked as the world's largest oil company in the comprehensive ranking by the U.S. Petroleum Intelligence Weekly based on six indicators-oil reserves, natural gas reserves, oil production, natural gas production, oil processing capacity and oil product sales. About 66% of the world's proven crude oil reserves are concentrated in the Middle East, of which 26% are in Saudi Arabia, and Saudi Arabia's petroleum exploration, development and production are all controlled by Saudi Aramco. Saudi Aramco plays a major role in the economic life of the entire Kingdom and in the international energy and economic fields.
Petroleum exploration and production are the basic core of Saudi Aramco's business. Exploration and production within Saudi Arabia are exclusively undertaken by Aramco. Starting in 1986, the company implemented a national exploration plan. By 1994, the national exploration area had increased about 7 times, to a total area of more than 1.5 million km2. Successful exploration and improved production technology have enabled the company to continuously increase or maintain its crude oil reserves. At the end of 1996, the company's proven crude oil reserves reached 35.82 billion tonnes, a 1% increase over 1995 and 40 times that of 1988, with a reserves-to-production ratio of 84 years, ranking first in the world; in 1996 crude oil production was 392 million tonnes, ranking first in the world. Saudi Arabia is OPEC's largest oil producer and the country with the most spare capacity, with oil exports of about 350 million tonnes/year. The oil produced by Saudi Aramco is divided into five grades from heavy oil to new high-quality light oil, meeting the specific needs of refineries around the world. In 1996, Saudi Aramco's natural gas production was 37.46 billion m3, 1.6% of the world total, ranking ninth in the world; at the end of 1996, proven natural gas reserves were 53 trillion m3, 3.2% of the world's proven reserves, ranking sixth in the world. The natural gas produced by Saudi Aramco is mainly associated gas; before the Master Gas System was built (1982), most of the gas was flared. After the Master Gas System was put into use, the wet gas processing capacity was 44.4 billion m3/year. At present all associated and non-associated gas enters the system, and about 50% of gas production can be utilized and sold. Saudi Aramco has three natural gas processing plants at Berri, Uthmaniyah and Shedgum; and two fractionation plants at Ju'aymah and Yanbu, for recovering condensate and producing ethane, propane, butane and natural gas liquids. After merging the business of Saudi Arabian Marketing and Refining Company, Saudi Aramco also began to be responsible for the sales of liquefied petroleum gas.
Star Enterprise Company, in which Saudi Aramco holds 50%, is responsible for petroleum refining and product sales in the United States, operating 3 refineries with a processing capacity of about 30 million tonnes/year; it also operates 50 petroleum distribution terminals and more than 1,000 gas stations. In addition, Saudi Aramco holds shares in one refinery each in South Korea, the Philippines and Greece. 15% of Saudi Aramco's exported crude oil is processed in its overseas affiliated refineries.
Major investments are made in the product distribution network.
It is worth noting that the technologies and standards in this field continue to evolve and improve.
The Royal Decree M/1 issued by the Saudi Kingdom in 1993 concentrated the domestic refining industry under Saudi Aramco's management, greatly expanding the company's scope of responsibility, placing the entire Kingdom's refining industry under overall planning and better meeting the Kingdom's long-term refining and product marketing needs. This not only consolidated the company's domestic position but also greatly strengthened its position in the world oil market, bringing it into the ranks of the world's largest refining enterprises. At the same time, Saudi Aramco seized the opportunity to actively establish downstream alliance relationships with foreign partners. The earliest was the 1988 joint establishment with Texaco of Star Enterprise Company for petroleum refining and product sales in the United States; later it successively established joint refining and marketing cooperation with the Philippines, Greece, South Korea and other countries, and also agreed to establish a tripartite joint venture with Texaco and Shell. In addition, the company is actively negotiating joint refineries with India and China. The above cooperative relationships opened new doors for Aramco, enabling it to continue to advance and expand its global business.
In 1982, the Saudi Arabian Oil Company's Exploration and Petroleum Engineering Center was put into use. It is one of the largest and most advanced geoscience facilities in the world and second to none in the Middle East; close cooperation with this center and the establishment of related laboratories and R&D centers have made Saudi Aramco basically independent of other oil companies for upstream (exploration and production) technical support. The center can process and analyze digital data from 2-D seismic surveys; in 1991 it introduced horizontal drilling technology; its computer center has a giant computer network using the latest hardware and application software, and can process and interpret all seismic survey and drilling data, enabling the company to use its resources more effectively. Saudi Aramco believes that, with further exploration continuing, relying on its technological and operational advantages, the company can maintain its position as the world's lowest-cost producer.
Saudi Aramco recognized from its early days that the key to continuous progress is a well-educated and well-trained workforce capable of undertaking important responsibilities. Over the years, the company has designed a wide range of training programs, from entry-level training to advanced management programs for degree-holding professionals, meeting the needs of every employee, improving their work skills, keeping employees abreast of new technology developments and cultivating world-class experts. Today, the company has more than 2,000 full-time teachers, training staff and support personnel. In 1995, more than 8,000 Saudi employees participated in vocational and academic training full-time or using part of their working time; in addition, about 7,000 employees participated in management training courses. This strategy of Saudi Aramco has achieved great results: for several years Saudi employees have held almost all management positions in the company and also undertaken all operations of the entire production facilities.
It is worth noting that the technologies and standards in this field continue to evolve and improve.
Internationally, in 1995 the company purchased 50% of a 5.5-million-tonne/year refinery in Greece and 50% of 300 gas stations and other related assets, providing an important gateway for Saudi Aramco to enter the European and American markets. In addition, the Port Arthur refinery and the Covenant refinery of Star Enterprise Company (50% owned by Saudi Aramco) were upgraded in 1992 and 1993 respectively, including the installation of a 1.25-million-tonne/year light cycle gas oil hydrotreater, a delayed coker and related hydrotreating and sulfur recovery units. Petron of the Philippines, in which Saudi Aramco acquired a stake in 1994, planned to increase its distillation capacity by 1.25 million tonnes/year by the end of 1997 and expand its retail network, terminals and storage facilities.
In July 1996, Saudi Aramco signed a memorandum with Portugal's Petrogal to study the possibility of the two companies forming a joint venture on the basis that Aramco would acquire a substantial stake in Petrogal and supply crude oil to the new company. Aramco proposed to take a 30-35% stake. Petrogal owns two refineries in Portugal with a total refining capacity of 15.2 million tonnes/year, holds a 56% share of the Portuguese petroleum products market, and owns a sales network of 1,341 GALP gas stations distributed in Portugal and Spain. Star Enterprise Company, the Saudi Aramco-Texaco joint venture, is currently in talks with Shell about a merger to form a tripartite joint venture; a memorandum of understanding was reached in July 1997, and details are under further negotiation. The merged company would become the largest oil company in the United States, with 22,200 gas stations, 13 refineries, a refining capacity of 97.4 million tonnes/year, and a market share in the U.S. of more than 12.5%.
Furthermore, this technology also sees broad application and practice in related fields.
In addition, Saudi Aramco also signed three upstream business package agreements covering an area of 120,000 km2. In March 2004, the company signed contracts with a joint venture composed of Russia's Lukoil, China Petroleum & Chemical Corporation (Sinopec), Italy's ENI and Spain's Repsol.
Saudi Aramco also operates the world's largest single hydrocarbon network-the Kingdom of Saudi Arabia's Master Gas System (MGS). The MGS is a gas gathering and processing system, begun in the mid-1970s and, since its completion in 1982, a mainstay of the Kingdom's industrial network. The MGS enables Saudi Aramco to use or market almost all associated gas produced by oil production and all non-associated gas from very deep gas fields. Throughout the company's gas operations, the natural gas is processed to produce clean fuel (methane or sales gas) and feedstocks (methane, ethane, propane, butane and natural gasoline). Methane and ethane are used only for the Kingdom's industry and utilities. The surplus propane, butane and natural gasoline (also called liquefied petroleum gas or NGL) that the Kingdom's petrochemical industry cannot consume are exported to countries around the world.
With the expansion of the Kingdom's industrial base, demand for sales gas will also grow at 5% per year. Natural gas is used for power generation, as fuel and feedstock for the petrochemical industry, for desalination and to support oil and gas operations. At Saudi Aramco, we are currently undertaking several billion-dollar projects to increase gas processing capacity. Once completed, these projects will raise the processing capacity for associated and non-associated gas from 9.3 billion scfd (standard cubic feet per day) to 12.5 billion scfd.
Moreover, from an industry-development perspective, market demand is also driving technological progress.
Saudi Aramco's sales and marketing activities are managed by three divisions (crude oil, products and logistics), which are responsible for the global export of crude oil, refined products, liquefied natural gas and sulfur and the import of refined products to make up for domestic market shortfalls. In addition to the sales and marketing headquarters in Dhahran, Saudi Aramco has numerous branches and marketing service offices around the world:
Furthermore, this technology also sees broad application and practice in related fields.
The CNPC Yunnan Petrochemical refining project is a supporting project of the China-Myanmar oil and gas pipeline; this project will fill the gap of refining projects in Yunnan and Guizhou, meet the rapidly growing market demand for refined oil in the southwest region, and promote regional economic and social development. The joint-venture refinery officially started construction in 2012 and is expected to be completed and put into operation in 2015, when it can supply Yunnan, Sichuan, Guizhou, Guangxi and other provinces with 7.6 million tonnes/year of refined oil and 250,000 tonnes/year of LPG. Since the China-Myanmar oil pipeline has a transmission capacity of 23 million tonnes/year, after the first phase is completed the refinery's second phase will be considered, and its crude processing capacity is expected to reach 20 million tonnes/year.
