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Saudi Aramco

Saudi Aramco

Tagline

Saudi Aramco: Coming Soon to Tadawul

Net Worth

$2,000,000,000,000

Started in (City)

Dhahran

Started in (Country)

Saudi Arabia

Incorporation Date

01st December, 1933

Bankruptcy Date

-

Founders

  • Ali I. Al-Naimi

About

Saudi Aramco, officially the Saudi Arabian Oil Company (formerly Arabian-American Oil Company), is a Saudi Arabian multinational petroleum and natural gas company based in Dhahran, Saudi Arabia. It is an oil and gas industry founded 87 years ago in 1933. Amin H. Al-Nasser is the President & CEO, Yasir Al-Rumayyan is the Chairman and Wes Meadows is Executive Director with about 76000 employees. On Wednesday, 12 June 2019, Aramco reported its net income at $111.1 billion in 2018 compared to $75.9 billion in 2017, with total revenues at $355.9 billion in 2018. On the 4th of August 2020, Apple, Inc. surpassed Saudi Aramco in market value, making it the world’s most valuable company.

Beginning

Saudi Aramco’s origins trace to the oil shortages of World War I and the exclusion of American companies from Mesopotamia by the United Kingdom and France under the San Remo Petroleum Agreement of 1920. The US administration at the time had popular support for an "Open Door Policy", which Herbert Hoover, secretary of commerce, initiated in 1921. Standard Oil of California (SoCal) was among those US companies seeking new sources of oil from abroad. Through its subsidiary company, the Bahrain Petroleum Co. (BAPCO), SoCal struck oil in Bahrain in May 1932. This event heightened interest in the oil prospects of the Arabian mainland. After four years of fruitless exploration, the first success came with the seventh drill site in Dhahran in 1938, a well-referred to as Dammam No. 7. This well immediately produced over 1,500 barrels per day (240 m3/d), giving the company confidence to continue. On 31 January 1944, the company name was changed from California-Arabian Standard Oil Co. to Arabian American Oil Co. (or Aramco).

Road to Success

In May 2001, Saudi Arabia announced the Gas Initiative, which proposed forming 3 joint ventures with 8 IOCs for gas exploration on pure upstream acreage. Core Venture 1 included south Ghawar and north Rub\’ Al-Khali, Core Venture 2 included the Red Sea, while Core Venture 3 involved Shaybah and Kidan. In 2003, Royal Dutch Shell and Total S.A. formed a partnership with Saudi Aramco in Core Venture 3. In 2004, Core Venture 1 became three separate joint ventures with Saudi Aramco holding 20%, one with Lukoil, a second with Sinopec, and a third with Repsol. By 2004, Aramco was producing 8.6 million barrels per day (mbpd) out of a potential 10 mbpd. In 2005, Aramco launched a five-year plan to spend $50 billion to increase their daily capacity to 12.5 mbpd by increasing production and refining capacity and doubling the number of drilling rigs. In 2005, Saudi Aramco was the world’s largest company with an estimated market value of $781 billion. In June 2008, in response to crude oil prices exceeding $130 a barrel, Aramco announced it would increase production to 9.7 million barrels per day (mbpd). Then as prices plummeted, Aramco started in Jan. 2009, that it would reduce production to 7.7 mbpd. In 2011, Saudi Aramco started production from the Karan Gas Field, with an output of more than 400 million SCF per day. In January 2016, the Deputy Crown Prince of Saudi Arabia, Mohammad bin Salman Al Saud, announced he was considering listing shares of the state-owned company, and selling around 5% of them in order to build a large sovereign fund. In 2020, Saudi Aramco acquired a 70% share in SABIC, a chemicals manufacturing company.

Challenges

-In June 2020, Saudi Aramco laid off nearly 500 of its more than 70,000 employees, while the global energy firms were reducing their workforce due to the COVID-19 pandemic. However, the majority of the workers who lost their job at Aramco were foreigners. -On August 9, 2020, Saudi Aramco reported a 50 percent fall in net income for the first half of its financial year, as demand for oil and prices continued to fall due to the coronavirus crisis. This came after Saudi Aramco lost its title as the world’s largest listed company by market capitalization to Apple, on July 31, 2020. -Aramco computers were attacked by a virus on 15 August 2012. The following day Aramco announced that none of the infected computers were part of the network directly tied to oil production and that the company would soon resume full operations -On 14 September 2019, there was a drone attack on two Saudi Aramco plants: the Abqaiq oil processing facility and Khurais oil field. Houthi rebels claimed responsibility for the attack. The attack cut 5.7 million barrels per day (bpd) of Saudi crude output, over 5 percent of the world’s supply.

Failures

-On 29 May 1933, the Saudi Arabian government granted a concession to SoCal in preference to a rival bid from the Iraq Petroleum Co. The concession allowed SoCal to explore for oil in Saudi Arabia. SoCal assigned this concession to a wholly-owned subsidiary, California-Arabian Standard Oil (CASOC). In 1936, with the company having had no success at locating oil, the Texas Oil Co. (Texaco) purchased a 50% stake of the concession. -In Sept. 1990, after the start of the Gulf War, Aramco was expected to replace much of the oil production removed from the global market due to the embargo of Iraq and occupied Kuwait. This amounted to producing an extra 4.8 million barrels per day (Mbpd) to keep the global oil market stable. In addition, Aramco was expected to provide all of the coalition aviation and diesel needs. Aramco recommissioned 146 Harmaliyah, Khurais, and Ghawar oil wells with associated gas-oil separation plants, and saltwater treatment pipeline, that had been mothballed during the 1980s oil price collapse. Daily production increased from 5.4 Mbpd in July to 8.5Mbpd in Dec. 1990 after a three-month de-mothball effort.

Subsidies

  • SABIC
  • Aramco Overseas Company B.V.
  • Saudi Aramco Total Refining and Petrochemical Co.
  • Saudi Aramco Mobil Refinery Co Ltd
  • Saudi Aramco Jubail Refinery Company
  • Aramco Services Company
  • S-Oil
  • Aramco Trading Company
  • Luberef
  • Yanbu Aramco Sinopec Refining (YASREF) Company

CEOs

  • Ali I. Al-Naimi
  • Andrew N. Liveris
  • Lynn Elsenhans
  • Peter Cella
  • Mark Weinberger
  • Amin H. Al-Nasser