Saudi Aramco: Company Profile
Whether by revenue, workforce, or assets, the company is the largest oil company in the Middle East, with 57,500 employees. Its headquarters are in Dhahran, Saudi Arabia; the current chairman is Ali bin I. al-Jumah.
Moreover, from the perspective of industrial development, market demand is also driving technological progress.
In 1960, Aramco's crude oil production reached 60 million tons/year, a 57.7% increase over 1950. During this period, Aramco's headquarters had moved to Doha, Saudi Arabia, and the Saudi government also sent two representatives to the company's board of directors, but Aramco remained under the control of four U.S. oil companies, which also controlled the crude oil production and prices that had a decisive impact on the Saudi government's fiscal revenue. To fight for control of the oil, the Saudi government waged a firm struggle against the U.S. companies. In 1960, the Organization of the Petroleum Exporting Countries (OPEC), including Saudi Arabia, was founded. On November 30, 1962, the Saudi government established the fully state-owned General Petroleum and Minerals Organization (PETROMIN), the purpose of which was to enable the government to participate in the operation of the petroleum industry, including all activities in Aramco's concession areas. Although PETROMIN itself did not produce crude oil, by 1970 it had jointly established many enterprises with various companies and independently operated a refinery in Jiddah and a fertilizer plant in Dammam. The entire history of PETROMIN's development in the 1960s was the history of the Saudi government's struggle to wrest control of the oil from Aramco's four U.S. partners.
It is worth noting that the technologies and standards in this field are also constantly evolving and improving.
In the late 1970s, the outbreak of the second oil crisis spurred the development of alternative energy sources such as natural gas, while OECD member countries' restrictions on oil consumption led to a contraction in crude oil demand; consequently, from 1980 Saudi Arabia adopted measures to sharply cut crude oil output to support prices. By 1985, the Saudi government began a plan to rapidly restore Saudi crude oil market share, and output rose swiftly, causing oil prices to fall 62-66% in 1986. The implementation of the above production-cut-to-protect-price policy and the price collapse of 1986 caused Aramco's revenue to drop rapidly, forcing large-scale layoffs.
In March 1987, to preserve the crude oil market share Saudi Arabia had held during the oil glut of the 1960s, and relying on its relationship with Aramco's former shareholder companies, Saudi Arabia signed a long-term crude oil supply contract of 62.5 million tons/year with the four U.S. companies, but it terminated the contract before long.
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, it 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 operations of the Kingdom and the government's half-interests in three joint-venture refineries to Saudi Aramco. Thus Saudi Aramco controlled all hydrocarbon industries in the Kingdom except lubricants. By July 1997, the Saudi government decided to transfer 71% of Petrolube's shares and 70% of Lubere's shares to Aramco, formally bringing the company into the national lubricants industry.
In November 2012, Saudi Aramco established a subsidiary in Beijing; Aramco Asia is understood to conduct various businesses including crude oil and chemical marketing, coordination among joint ventures, procurement, inspection, R&D, and project management. Saudi Aramco is a global integrated energy company and a world leader in crude oil extraction 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].
In addition, multiple factors must be considered in actual engineering applications.
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 a 50% stake in the U.S. Star Enterprise Company; Saudi Petroleum International Inc. in New York and Saudi Petroleum Overseas Ltd. in London and Tokyo are both responsible for sales; and 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, refining capacity, and 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 entirely 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 arenas.
Petroleum exploration and production are the fundamental core of Saudi Aramco's business. Exploration and production within the Kingdom are monopolized by Aramco. From 1986 the company began implementing a national exploration plan; by 1994 the exploration area had expanded about sevenfold to a total of more than 1.5 million square kilometers. Successful exploration and improved recovery technologies enabled the company to continuously increase or maintain its crude oil reserves. By the end of 1996 the company's proven crude oil reserves reached 35.82 billion tons, up 1% from 1995 and 40 times that of 1988, with a reserve-to-production ratio of 84 years, ranking first in the world; its 1996 crude oil output of 392 million tons ranked 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 tons/year. The crude oil produced by Saudi Aramco is graded into five classes, from heavy oil to the new high-quality light oil, to meet the specific needs of refineries around the world. In 1996 Saudi Aramco's natural gas output was 37.46 billion cubic meters, 1.6% of the world total, ranking ninth in the world; by the end of 1996 its proven natural gas reserves were 53 trillion cubic meters, 3.2% of the world total, ranking sixth. 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 operation, wet-gas processing capacity reached 44.4 billion cubic meters/year. Currently all associated and non-associated gas enters the system, and about 50% of gas production can be utilized and sold. Saudi Aramco operates three gas processing plants at Berri, Uthmaniyah, and Shedgum, and two fractionation plants at Juaymah and Yanbu for recovering condensate and producing ethane, propane, butane, natural gasoline, and other products. After merging the businesses of Saudi Arabian Marketing and Refining Company, Saudi Aramco also took charge of LPG sales.
Star Enterprise Company, in which Saudi Aramco holds a 50% stake, is responsible for petroleum refining and product sales in the United States, operating three refineries with a processing capacity of about 30 million tons/year, as well as 50 product distribution terminals and more than 1,000 gas stations. In addition, Saudi Aramco holds a stake in one refinery each in South Korea, the Philippines, and Greece. About 15% of Saudi Aramco's exported crude oil is processed at its overseas affiliated refineries.
Major investment in the product distribution network.
In addition, multiple factors must be considered in actual engineering applications.
The Royal Decree M/1 promulgated by Saudi Arabia in 1993 placed the Kingdom's domestic refining industry under Saudi Aramco's management, greatly expanding the company's scope of responsibility, putting the entire Kingdom's refining industry under overall planning more in line with the Kingdom's long-term refining and product-distribution 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 build downstream alliances 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 established joint-venture refining and marketing partnerships with the Philippines, Greece, South Korea, and others, and agreed to form a tripartite joint venture with Texaco and Shell. In addition, the company is actively negotiating joint-venture refineries with India and China. The above partnerships opened new doors for Aramco, enabling it to continue advancing and expand its global business.
In 1982, Saudi Aramco's Exploration and Petroleum Engineering Center was put into operation. 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 essentially independent of other oil companies for upstream (exploration and production) technical support. The center can process and analyze digital data from 2D seismic surveys; horizontal drilling technology was introduced in 1991; and its computer center has a giant computer network using the latest hardware and application software to process and interpret all seismic and drilling data, enabling the company to use its resources more effectively. Saudi Aramco believes that, with continued further exploration and its technological and operational advantages, it can maintain its position as the world's lowest-cost producer.
From its early days, Saudi Aramco recognized that the key to sustained progress is a well-educated and well-trained workforce capable of shouldering major 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 - to meet each employee's needs, improve their skills, keep them abreast of new technologies, and cultivate world-class experts. Today, the company has more than 2,000 full-time teachers, trainers, and support staff. In 1995, more than 8,000 Saudi employees participated in vocational and academic training full-time or using part of their work time, and about 7,000 employees attended management training courses. This strategy has paid off enormously: for years Saudi employees have held almost all managerial positions and also undertaken all operations of the production facilities.
Meanwhile, the related supporting processes and equipment are also being continuously optimized and upgraded.
Internationally, in 1995 the company bought a 50% stake in a 5.5-million-ton/year refinery in Greece and 50% of 300 gas stations and other related assets, providing Saudi Aramco an important gateway into the European and American markets. In addition, Saudi Aramco's 50%-owned Star Enterprise Company upgraded its Port Arthur and Covent refineries in 1992 and 1993 respectively, including installing a 1.25-million-ton/year light cycle gas oil hydrotreater, a delayed coker, and related hydrotreating and sulfur-recovery units. Petron, in which Saudi Aramco acquired a stake in 1994, planned to add 1.25 million tons/year of distillation capacity 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 a joint venture based on Aramco acquiring a substantial stake in Petrogal and supplying crude oil to the new company. Aramco proposed a 30-35% stake. Petrogal owns two refineries in Portugal with a total refining capacity of 15.2 million tons/year, holds a 56% share of Portugal's petroleum product market, and operates a sales network of 1,341 GALP gas stations in Portugal and Spain. Saudi Aramco's Star Enterprise Company (with Texaco) is currently in talks with Shell to merge and 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 tons/year, and a U.S. market share above 12.5%.
It is worth noting that the technologies and standards in this field are also constantly evolving and improving.
In addition, Saudi Aramco signed three upstream business package agreements covering an area of 120,000 square kilometers. In March 2004, the company signed contracts with a joint venture formed by Russia's Lukoil, China Petroleum and 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, first built in the mid-1970s, and since its completion in 1982 has been the backbone of the Kingdom's industrial network. The MGS enables Saudi Aramco to use or market almost all associated gas generated by oil production and all non-associated gas from ultra-deep gas fields. Throughout the company's gas operations, 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) not consumed by the Kingdom's petrochemical industry is exported to countries around the world.
As the Kingdom's industrial base expands, 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 associated and non-associated gas processing capacity from 9.3 billion scfd (standard cubic feet per day) to 12.5 billion scfd.
In addition, this technology has also been widely applied and practiced in related fields.
Saudi Aramco's sales and marketing activities are managed by three departments (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 shortfalls. In addition to its sales and marketing headquarters in Dhahran, Saudi Aramco has numerous branches and marketing-service offices around the world:
In addition, this technology has also been widely applied and practiced in related fields.
The Yunnan Petrochemical refining project of CNPC is a supporting project of the China-Myanmar oil and gas pipeline; it will fill the gap in refining projects in Yunnan and Guizhou, meet the rapidly growing market demand for refined oil in Southwest China, and promote regional economic and social development. The joint-venture refinery started construction in 2012 and was expected to be completed and put into operation in 2015, by which time it could supply Yunnan, Sichuan, Guizhou, Guangxi, and other provinces with 7.6 million tons/year of refined oil and 250,000 tons/year of LPG. Since the China-Myanmar oil pipeline has a capacity of 23 million tons/year, after the first phase the refinery's second phase will be considered, and its crude processing capacity is expected to reach 20 million tons/year.
