OPERATIONS

OF
SAUDI ARAMCO
OVERVIEW
 INTRODUCTION
• Saudi Aramco was formed as the product of a Concession Agreement between the
Saudi Arabian government and Standard Oil Company of California (SOCAL) in 1933.
Aramco began its first drilling operations shortly after, starting its first commercial
oil production in 1938. Over the next decade, the company rapidly expanded across
Saudi Arabia, reaching crude oil production of 500,000 barrels per day in 1949. In
order to keep up with production, the firm built out its distribution pipeline and
built the Trans-Arabian Pipeline, the longest in the world.

• In 1973, the Saudi Arabian government purchased a 25% interest in Aramco,

gradually increasing its stake to 100% in the late 1970s. In the late 1980s, the Saudi
Arabian Oil Company (Saudi Aramco) was officially established. In 1989, in an effort
to transform itself from an oil-producing and exporting company to an integrated
petroleum enterprise, Aramco formed a joint venture with Texaco in the U.S. By
2017, the Saudi oil behemoth had became the sole owner of North America’s
largest single-site crude oil refinery at Port Arthur, Texas. Throughout the 1990s, it
continued to build alliances and partnership deals around the world. In recent
years, the company has stepped up efforts to diversify its business, investing heavily
in R&D to expand into nonmetallic and crude-to-chemicals products.
Current activities
• State-owned Saudi Aramco, officially known as Saudi
Arabian Oil Company, is the world's biggest oil producer. It
is officially based in Dhahran, Saudi Arabia and has an
estimated 270 billion barrels in reserves.
• It is by far the world's most profitable company, eclipsing
even tech giants such as Apple Inc. and Alphabet Inc. This
was revealed in April 2019 when ratings agencies released
financial information of the long-secretive company before
its debut international bond sale, which raised $12 billion.
• Saudi Aramco began to attract dramatically increased
investor attention last year when Saudi Crown Prince
Mohammed bin Salman announced plans to list 5% of
Aramco at a valuation of approximately $2 trillion in what
may be the largest IPO ever.
 OPERATION STRATEGY
• There sre two types of operations used by
Saudi Aramco.
1. Upstream operations
2. Downstream operations
 Upstream Streatgy
• Upstream strategy: Leveraging advantages to maximize
value.
• Maintain our position as the world’s leading crude oil
producer by production volume, and provide
consistent, reliable, and competitive crude oil supply to
customers.
• Further diversify operations to capture value from
strategic integration
• Expand natural gas activities to supply the Kingdom’s
natural gas market
 Exploration: Adding to our resources
• Exploration has been the cornerstone of Saudi
Aramco since the Kingdom first granted a
concession to our predecessor, Standard Oil of
California, in .1933
• Decades of onshore and offshore exploration
in Saudi Arabia have resulted in an extensive
portfolio of oil and gas fields that includes the
world’s largest onshore and offshore oil fields
(Ghawar and Safaniyah, respectively).
Conti…
• Our unconventional gas exploration program
targeted three areas: Northern Arabia, the
South Ghawar area, and the Jafurah Basin east
of Ghawar.
 New Discoveries
• Crude oil and gas exploration activities during
2017 resulted in the discovery of two new oil
fields and one new gas reservoir.
• The new oil fields discovered in 2017 were:
Sakab, southeast of Haradh, and Zumul, in the
Rub ’al-Khali. The new gas reservoir
discovered in 2017 was Jauf, in the Sahba
field.
 Oil Production: Investing to meet
demand
• The International Energy Agency’s (IEA) World
Energy Outlook 2017 New Policies Scenario
estimates that global energy needs will expand by
30% between today and 2040. With petroleum
energy resources expectedto form a key
component of the world’s energy mix for the
foreseeable future, we continue to invest in our
capability to meet current and projected future
demand.
• We have consistently produced five grades of
Arabian crude oil.
Our production strategy is guided by
four interlinked considerations.
– The crude oil grades available
– The long-run value of different crude oil slates
– Our ability to sell the crude oil grades in strategic
markets
– The near-term requirements based on a long-term
assessment of future performance