Saudi Aramco

                                                                

Introduction

Saudi Arabian Oil Company is a company that deals with crude oil and natural gas exploration, production, transportation, and sale.

It is divided into three segments: Upstream, Downstream, and Corporate. Exploration, field development, and production of crude oil, natural gas, and natural gas liquids are all part of the Upstream segment. Refining, logistics, power generation, and the marketing of crude oil, petroleum and petrochemical products, as well as related services to international and domestic customers, are all part of the Downstream segment. Human resources, finance, and information technology are among the services provided by the Corporate segment. The company was founded on May 29, 1933, in Dhahran, Saudi Arabia, and is headquartered there.

 

Profile

• Market Cap: 6.986T                                                   CEO: Mr. Amin H. Nasser                               
• Sector(s): Energy                                                        Industry: Oil & Gas Integrated
• Founded: 1933                                                            Headquarters: Dhahran, Saudi Arabia
• Full Time Employees: 70,000

AS of September 25, 2021

 

Origin

The origins of Saudi Aramco can be traced back to World War I oil shortages and the exclusion of American companies from Mesopotamia by the UK and France under the San Remo Petroleum Agreement of 1920. The US administration at the time had widespread public support for Herbert Hoover, the secretary of commerce, who initiated the "Open Door policy" in 1921. Standard Oil of California (SoCal) was one of the US companies looking for new oil sources overseas. In May 1932, SoCal discovered oil in Bahrain through its subsidiary, the Bahrain Petroleum Co. (BAPCO). This event piqued interest in the Arabian mainland's oil prospects. On May 29, 1933, the Saudi Arabian government granted SoCal a concession over a competing bid from the Iraq Petroleum Company. SoCal was able to explore for oil in Saudi Arabia thanks to the concession.

California-Arabian Standard Oil, a wholly owned subsidiary of SoCal, was given this concession (CASOC). The Texas Company (Texaco) purchased a 50 percent stake in the concession in 1936 after the company failed to locate oil. The seventh drill site in Dhahran in 1938 was the first success after four years of fruitless exploration.

Refining and chemicals

While the company had no intention of refining oil at first, the Saudi government wanted only one company to handle oil production. As a result, the government issued a royal decree on July 1, 1993, merging Saudi Aramco and Samarec, the country's oil refining company. The following year, a Saudi Aramco subsidiary purchased a 40% stake in Petron Corporation, the Philippines' largest crude oil refiner and marketer. Saudi Aramco has been in charge of refining and distributing oil in Saudi Arabia since then.

Saudi Aramco sold its entire stake in the company to the Ashmore Group, a London-based investment firm, in 2008. When Ashmore made a required tender offer to other shareholders, it gained an additional 11 percent.

 

Exploration

Geophysicists and geologists make up a large part of the Saudi Aramco workforce. Since 1982, Saudi Aramco has been looking for oil and gas reserves. The EXPEC Advanced Research Center is where the majority of this happens. Cray Supercomputers (CRAY-1M) were originally used by Saudi Aramco in its EXPEC Advanced Research Center (ECC). To support Saudi Aramco's exploration in the frontier areas and the Red Sea, ECC installed a new supercomputing system in late 2009 with a disc storage capacity of 1,050 terabytes (i.e., exceeding one petabyte), the largest storage installation in the company's history.

 

Functions

Saudi Aramco is based in Dhahran, but it has operations all over the world, including exploration, production, refining, chemicals, distribution, and marketing. The Saudi Arabian Ministry of Petroleum and Mineral Resources, in collaboration with the Supreme Council for Petroleum and Minerals, monitors all of the company's activities. The ministry, however, bears far more responsibility in this area than the council.

 

International Investment

Saudi Aramco has expanded its global presence to include Asia, Europe, and North America, the three major global energy markets. In April 2019, Aramco agreed to pay US$1.24 billion for a 13 percent stake in Hyundai Oil bank, a South Korean oil refiner. Furthermore, on April 11, 2019, Aramco signed an agreement to supply Arabian Crude Oil to PKN Orlen, Poland's largest oil refiner.

 

Saudi Aramco IPO

Aramco went public in 2019, raising a record $25 billion through the sale of three billion shares. This was only 1.5 percent of the company's value, which is significantly less than what most businesses distribute. Apple, Alphabet, and Amazon (AMZN), for example, each have more than 84 percent of their shares held by the general public. As the proceeds from the offering are central to the Saudis' plan to diversify the oil giant, this allows Saudi Arabia to retain control of the company. Because of the "greenshoe" option, more shares are available for purchase.

 

Shipping

Several tankers have been used by Saudi Aramco to transport crude oil, refined oil, and natural gas to various countries. It used to have its own subsidiary company, Vela International Marine, which handled shipping to North America, Europe, and Asia before merging with Bahri. It is a partner in the King Salman Global Maritime Industries Complex, which will be the world's largest shipyard once completed.

 

Liquefied natural gas

Aramco intends to become a major LNG producer around the world. It sold its first LNG cargo to an Indian buyer from Singapore. To achieve its LNG market goal, the company is looking for potential joint ventures and partnerships around the world.

 

Apprises

Saudi Aramco 110B Gas Project to Foreign Investors

As of September 2021

Saudi Aramco is considering a bold move to open up one of the world's largest unconventional gas fields to foreign investors, according to business insider, as it looks to fund a $110 billion project to help it diversify from oil sales.

According to the people, the state-controlled producer is consulting with an adviser as it considers raising new equity or debt for its massive Jafurah site. They asked not to be identified because the information is confidential. According to the source, preliminary talks have begun with potential investors, including large commodity traders.

The discussions are still in the early stages, and Aramco may decide to seek other sources of funding for the Jafurah development, according to the sources. Aramco's spokesperson declined to comment.

Any deal involving Jafurah would be a rare instance of Saudi Aramco allowing outside investors to own stakes in its upstream oil and gas assets. Attempts to bring in Big Oil companies to help develop reserves in the late 1990s failed. Bloomberg News reported in April that the company began a review of its upstream business earlier this year as a precursor to such a potential move.

Prospects

According to BP Plc, Saudi Arabia has the second-largest gas reserves in the Arab world after Qatar. As the kingdom's rulers seek to reduce reliance on crude exports, the Jafurah field is a top priority. The site is estimated to contain 200 trillion cubic feet of rich raw gas, and Aramco plans to start production in 2024, with sales reaching 2.2 billion standard cubic feet per day by 2036.