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Saudi Arabian Oil Company

Headquarters in Dhahran, Saudi Arabia
Type	State-owned enterprise
Industry	Oil and gas
Founded	1933 (as California-Arabian Standard Oil Company) 1944 (as Arabian-American Oil Company) 1988 (as Saudi Arabian Oil Company/Saudi Aramco)
Headquarters	Dhahran, Saudi Arabia
Area served	Worldwide
Key people	Amin H. Nasser, President & CEO Khalid A. Al-Falih, Chairman & Minister of Energy, Industry and Mineral Resources
Products	Petroleum, natural gas and other petrochemicals
Revenue	Confidential
Net income	US$ 34 billion (first half of 2017)[1]
Owner	Government of Saudi Arabia (100%)
Number of employees	65,266 (2016)[2]
Website	www.saudiaramco.com

Saudi Aramco (Arabic: أرامكو السعودية‎ ʾArāmkō s-Saʿūdiyyah), officially the Saudi Arabian Oil Company, most popularly known just as Aramco (formerly Arabian-American Oil Company), is a Saudi Arabian national petroleum and natural gas company based in Dhahran.^[3][4]

It is one of the largest companies in the world by revenue and, according to accounts seen by Bloomberg News, the most profitable company in the world.^[5] Saudi Aramco has both the world's second-largest proven crude oil reserves, at more than 270 billion barrels (4.3×10¹⁰ m³),^[6] and second-largest daily oil production.^[7]

Saudi Aramco's financial data were leaked in April 2018 and according to Bloomberg's analysts the company could be valued at $1.2 trillion, significantly lower than the official figure of $2 trillion backed by Saudi officials^[8].

Headquartered in Dhahran, Saudi Arabia,^[9] Saudi Aramco operates the world's largest single hydrocarbon network, the Master Gas System. Its 2013 crude oil production total was 3.4 billion barrels (540,000,000 m³), and it manages over one hundred oil and gas fields in Saudi Arabia, including 288.4 trillion standard cubic feet (scf) of natural gas reserves. Saudi Aramco operates the Ghawar Field, the world's largest onshore oil field, and the Safaniya Field, the world's largest offshore oil field.^[10]

History

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.^[11] 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.^[12]

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. On 29 May 1933, the Saudi Arabian government granted a concession to SoCal in preference to a rival bid from the Iraq Petroleum Co..^[13] 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.^[14] 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.^[15] 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).^[16] In 1948, Standard Oil of New Jersey (later known as Exxon) purchased 30% and Socony Vacuum (later Mobil) purchased 10% of the company, with SoCal and Texaco retaining 30% each.^[17] The newcomers were also shareholders in the Iraq Petroleum Co. and had to get the restrictions of the Red Line Agreement lifted in order to be free to enter into this arrangement.^[18]

Aramco compound in Saudi Arabia, 1954.

In 1950, King Abdulaziz threatened to nationalize his country's oil facilities, thus pressuring Aramco to agree to share profits 50/50.^[19]

A similar process had taken place with American oil companies in Venezuela a few years earlier. The American government granted US Aramco member companies a tax break known as the golden gimmick equivalent to the profits given to King Abdulaziz. In the wake of the new arrangement, the company's headquarters were moved from New York to Dhahran.^[20] In 1951, the company discovered the Safaniya Oil Field, the world's largest offshore field. In 1957, the discovery of smaller connected oil fields confirmed the Ghawar Field as the world's largest onshore field.^[10]

In 1973, following US support for Israel during the Yom Kippur War, the Saudi Arabian government acquired a 25% "participation interest" in Aramco's assets. It increased its participation interest to 60% in 1974 and acquired the remaining 40% interest in 1976. Aramco continued to operate and manage the former Aramco assets, including its concessionary interest in certain Saudi Arab oil fields, on behalf of the Saudi Arab Government until 1988. In November 1988, a royal decree created a new Saudi Arab company, the Saudi Arabian Oil Company, to take control of the former Aramco assets. (or Saudi Aramco)^[21] and took the management and operations control of Saudi Arabia's oil and gas fields from Aramco and its partners. In 1989–90, high-quality oil and gas was discovered in three areas south of Riyadh: the Raghib area about 77 miles southeast of the capital.^[22]

In 2005, Saudi Aramco was the world's largest company with an estimated market value of $781 billion.^[23] In 2011, Saudi Aramco started production from the Karan Gas Field, with an output of more than 400 million scf per day.^[24]

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.^[25]

2012 cyber attack

Aramco computers were attacked by a virus on 15 August 2012.^[26][27] 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.^[28] Hackers claimed responsibility for the spread of the computer virus.^[29] The virus hit companies within the oil and energy sectors.^[30][31] A group named "Cutting Sword of Justice" claimed responsibility for an attack on 30,000 Saudi Aramco workstations, causing the company to spend a week restoring their services.^[26] The group later indicated that the Shamoon virus had been used in the attack.^[32] Due to this attack, the main site of Aramco went down and a message came to the home page apologizing to customers.^[33] Computer security specialists said that "The attack, known as Shamoon, is said to have hit 'at least one organization' in the sector. Shamoon is capable of wiping files and rendering several computers on a network unusable."^[31]Richard Clarke suggests the attack was part of Iran's retaliation for the U.S. involvement in Stuxnet.^[34]

Operation

Exploration

Headquarters of Aramco Services Co. in Houston

Saudi Aramco is headquartered in Dhahran, but its operations span the globe and include exploration, production, refining, chemicals, distribution and marketing. All these activities of the company are monitored by the Saudi Arabian Ministry of Petroleum and Mineral Resources together with the Supreme Council for Petroleum and Minerals.^[35] However, the ministry has much more responsibility in this regard than the council.^[35]

Exploration

A significant portion of the Saudi Aramco workforce consists of geophysicists and geologists. Saudi Aramco has been exploring for oil and gas reservoirs since 1982. Most of this process takes place at the Exploration and Petroleum Engineering Center (EXPEC). Originally, Saudi Aramco used Cray Supercomputers (CRAY-1M) in its EXPEC Computer Center (ECC)^[36] to assist in processing the colossal quantity of data obtained during exploration and in 2001, ECC decided to use Linux clusters as a replacement for the decommissioned Cray systems. ECC installed a new supercomputing system in late 2009 with a disk storage capacity of 1,050 terabytes (i.e, exceeding one petabyte), the largest storage installation in Saudi Aramco's history to support its exploration in the frontier areas and the Red Sea.^[37]

Refining and chemicals

While the company did not originally plan on refining oil, the Saudi government wished to have only one company dealing with oil production. Therefore, on 1 July 1993, the government issued a royal decree merging Saudi Aramco with Samarec, the country's oil refining company. The following year, a Saudi Aramco subsidiary acquired a 40% equity interest in Petron Corp., the largest crude oil refiner and marketer in the Philippines. Since then, Saudi Aramco has taken on the responsibility of refining oil and distributing it in the country.^[10]

Currently, Saudi Aramco's refining capacity is 5.4 million barrels per day (860,000 m³/d) (International joint and equity ventures: 2,500 Mbbl/d (400,000,000 m³/d), domestic joint ventures: 1,900 mpbd, and wholly owned domestic operations: 1,000 Mbbl/d (160,000,000 m³/d).)^[38]

Saudi Aramco's downstream operations are shifting its emphasis to integrate refineries with petrochemical facilities. Their first venture into it is with Petro Rabigh, which is a joint venture with Sumitomo Chemical Co. that began in 2005 on the coast of the Red Sea.^[10]

List of refineries

List of domestic refineries:^[38]

• 
  Jizan Refinery and terminal projects(JRTP) (4,00,000 bbl/d)(64,000 cubic meter/d)) Jizan construction ongoing.


• 
  Jeddah Refinery (78,000 bbl/d (12,400 m³/d)) Jeddah converted to product storage terminal in Nov'17.


• 
  Ras Tanura Refinery (550,000 bbl/d (87,000 m³/d)) (includes a Crude Distillation Unit, a Gas Condensate Unit, a hydrocracker, and catalytic reforming)


• 
  Riyadh Refinery (126,000 bbl/d (20,000 m³/d))


• 
  Yanbu Refinery (245,000 bbl/d (39,000 m³/d))

List of domestic refining ventures:^[38]

• The Saudi Aramco Mobil Refinery Co. Ltd. (SAMREF), Yanbu (400,000 bbl/d (64,000 m³/d))


• The Saudi Aramco Shell Refinery Co. (SASREF), Jubail (300,000 bbl/d (48,000 m³/d))


• 
  Petro Rabigh, Rabigh (400,000 bbl/d (64,000 m³/d))


• Saudi Aramco Base Oil Co. (Luberef)


• Saudi Aramco Total Refining and Petrochemical Co. (SATORP), Jubail^[39] (400,000 bbl/d (64,000 m³/d))


• Yanbu Aramco Sinopec Refinery (YASREF), Yanbu (400,000 bbl/d (64,000 m³/d))

List of international refining ventures:^[40]

• Fujian Refining and Petrochemical Co. (FRPC), People's Republic of China
  


• Sinopec SenMei (Fujian) Petroleum Co. Ltd. (SSPC), People's Republic of China


• 
  Motiva Enterprises LLC, United States 1,070,000 bbl/d (170,000 m³/d)


• Showa Shell, Japan 445,000 bbl/d (70,700 m³/d)


• 
  S-Oil, Republic of Korea 669,000 bbl/d (106,400 m³/d)


• Saudi Refining Inc., United States^[41]

Shipping

Saudi Aramco has employed several tankers to ship crude oil, refined oil and gas to various countries. It has created a subsidiary company, Vela International Marine, to handle shipping to North America, Europe and Asia.^[42] It is a stakeholder in the King Salman Global Maritime Industries Complex, a shipyard that will be the largest in the world when complete.^[43]

Environmental record

According to geographer Richard Heede,^[44] Aramco has led the list of companies with the highest level of CO₂ emissions globally since 1995 with a towering 1,707 million tonnes (1.680×10⁹ long tons; 1.882×10⁹ short tons) in 2013, amounting to almost 3.4% of worldwide anthropogenic emissions.^[45]

The company allegedly covered up a large oil spill in 1993.^[46]

See also

References

Bibliography

• 
  Vitalis, Robert (2006). America's Kingdom: Mythmaking on the Saudi Oil Frontier. Stanford: Stanford University Press. ISBN 0-8047-5446-2. 
  

External links

Wikimedia Commons has media related to Saudi Aramco.

• Web site of Aramco Services Co. - Saudi Aramco's US Subsidiary


• 
  A CNN report about the security of oil in Saudi Arabia. Much of it is about Saudi Aramco security.


• 
  Saudi Arabia's crude oil production chart (1980-2004) - Data sourced from the US Department of Energy


• 
  CBS 60 Minutes (2008-12-07) "The Oil Kingdom: Part One".


• 
  CBS 60 Minutes (2008-12-07) "The Oil Kingdom: Part Two".