Saudi Arabian Oil Company -Aramco

Type: Government-owned corporation of the Kingdom of Saudi Arabia

Headquarters: HQ in Dhahran, Saudi Arabia; operating in various locations worldwide

Industry: Oil & Gas

Revenue: Undeclared^[2]

Slogan: "Energy to the World"

Saudi Aramco, the state-owned national oil company of Saudi Arabia, is the largest oil corporation in the world and the world's largest in terms of proven crude oil reserves and production. Headquartered in Dhahran, Saudi Arabia, Saudi Aramco also operates the world's largest single hydrocarbon network, the Master Gas System. It was formerly known as just Aramco, an acronym for Arabian American Oil Company.

Contents

• 1 History
  • 1.1 Timeline
• 2 Present
• 3 Operation
  • 3.1 Exploration
  • 3.2 Drilling & Work over
  • 3.3 Refining and Distribution
  • 3.4 Shipping
  • 3.5 Research & Development
  • 3.6 Other services

History

Saudi Aramco's history dates back to May 29, 1933, when the Government of Saudi Arabia signed a concessionary agreement with Standard Oil of California (Socal) allowing them to explore Saudi Arabia for oil. Standard Oil of California passed this concession to a wholly-owned subsidiary called California-Arabian Standard Oil Co. (Casoc). In 1936 with the company having no success at locating oil, the Texas Oil Company purchased a 50% stake of the concession.

After a long search for oil that lasted around four years without success, the first success came with the seventh drill site in Dammam, an area located a few miles north of Dhahran in 1938, a well referred to as Dammam number 7. The discovery of this well, which immediately produced over 1,500 barrels per day, gave the company the hope to continue and flourish. The company name was changed in 1944 from California-Arabian Standard Oil Company to Arabian American Oil Company (or Aramco). In 1948 Standard Oil of California and the Texas Oil Company were joined as investors by Standard Oil of New Jersey who purchased 30% of the company, and Socony Vacuum who purchased 10% of the company, leaving Standard Oil of California and the Texas Oil Company with equal 30% shares.

In 1950, King Abdul Aziz Ibn Saud threatened to nationalize his country's oil facilities, thus pressuring Aramco to agree to share its profits on oil sales 50/50. 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 lost in sharing oil profits with Ibn Saud.

In 1973 the Saudi Arabian government acquired a 25% share of Aramco, increased this to 60% by 1974 and finally acquired full control of Aramco by 1980. In November 1988 the company changed its name from Arabian American Oil Company to Saudi Arabian Oil Company (or Saudi Aramco).

Timeline

• 1932 Oil is discovered in Bahrain. Socal begins a year-long series of negotiations with the Saudi government.
• 1933 Saudi Arabia grants oil concession to California Arabian Standard Oil Company (Casoc), affiliate of Standard Oil of California (Socal, today's Chevron). Oil prospecting begins on Kingdom's east coast.
• 1936 Texas Oil Company (now Texaco) acquires 50% interest in Socal's concession. The joint venture became known as the California Texas Oil Company, or Caltex.
• 1938 Kingdom's first commercial oil field discovered at Dhahran. Crude is exported by barge to Bahrain.
• 1939 First tanker load of petroleum is exported. (Socal’s D.G. Scofield)
• 1944 Casoc changes its name to Arabian American Oil Company (Aramco).
• 1945 Ras Tanura Refinery begins operations (eventually becomes the largest oil-refinery in the world).
• 1948 Standard Oil of New Jersey (now Exxon) and Socony-Vacuum Oil (now Mobil) join Socal and Texaco as owners of Aramco.
• 1950 1,700-km Trans-Arabian Pipe Line (Tapline) is completed, linking Eastern Province oil fields to Lebanon and the Mediterranean.
• 1950 The US government bestows upon the US member companies a tax break equivalent to 50% of oil profits, a deal known as the Golden gimmick.
• 1956 Aramco confirms scale of Ghawar and Safaniya, world's largest oil field and largest offshore field, respectively.
• 1961 Liquefied petroleum gas (LPG) - propane and butane - is first processed at Ras Tanura and shipped to customers.
• 1966 Tankers begin calling at "Sea Island", new offshore crude oil loading platform off Ras Tanura.
• 1973 Saudi Government acquires 25 percent interest in Aramco.
• 1975 Master Gas System project is launched.
• 1980 Saudi Government acquires 100 percent participation interest in Aramco, purchasing almost all of the company's assets.
• 1981 East-West Pipelines, built for Aramco natural gas liquids and crude oil, link Eastern Province fields with Yanbu on the Red Sea.
• 1982 King Fahd visits Saudi Aramco, Dhahran, on Aramco's 50th Anniversary to inaugurate the Exploration and Petroleum Engineering Center (EXPEC), a milestone in the Saudization of the company's operations.
• 1984 Company acquires its first four supertankers.
• 1987 East-West Crude Oil Pipeline expansion project is completed, boosting capacity to 3.2 million barrels (510,000 m³) per day.
• 1988 Saudi Arabian Oil Company, or Saudi Aramco, is established.
• 1989 High-quality oil and gas are discovered south of Riyadh - the first find outside original operating area.
• 1991 Company plays major role combating Persian Gulf oil spill, the world's largest.
• 1992 East-West Crude Oil Pipeline capacity is boosted to 5 million barrels (800,000 m³) per day. Saudi Aramco affiliate purchases 35% interest in SsangYong Oil Refining Company (or S-Oil) of the Republic of Korea.
• 1993 Saudi Aramco takes charge of Kingdom's domestic refining, marketing, distribution and joint-venture refining interests by buying Jeddah-based Saudi Arabian Marketing and Refining Company (SAMAREC).
• 1994 Maximum sustained crude-oil production capacity is returned to 10 million barrels (1,600,000 m³) per day. Company acquires a 40% equity interest in Petron, largest refiner in the Philippines.
• 1995 Company completes a program to build 15 very large crude carriers. Saudi Aramco President and CEO Ali I. Al-Naimi is named the Kingdom's Minister of Petroleum and Mineral Resources, and Chairman of Saudi Aramco. Abdallah S. Jum'ah is named the CEO, President, and Director of Saudi Aramco.
• 1996 Saudi Aramco acquires 50 percent of Motor Oil (Hellas) Corinth Refineries and Avinoil from the Vardinoyannis family. Company also assumes controlling interest in two Jeddah-based lubricants companies, now known as Saudi Aramco Lubricating Oil Refining Company (Luberef) and Saudi Arabian Lubricating Oil Company (Petrolube).
• 1998 Saudi Aramco, Texaco and Shell establish Motiva Enterprises LLC, a major refining and marketing joint venture in the southern and eastern United States.
• 1999 HRH Crown Prince 'Abd Allah inaugurates the Shaybah field in the Rub' al-Khali desert, one of the largest projects of its kind in the world goes on stream. The Dhahran-Riyadh-Qasim multi-product pipeline and the Ras Tanura Upgrade project are completed. The second Saudi Aramco-Mobil lubricating oil refinery (Luberef II) in Yanbu' commences operations.
• 2000 Petroleum Intelligence Weekly ranks the company No.1 in the world for the 11th straight year, based on the Kingdom's crude oil reserves and production. Aramco Gulf Operations Limited is established to assume management of the government's petroleum interest in the Offshore Neutral Zone between Saudi Arabia and Kuwait. New facilities are under construction in the Haradh and Hawiyah gas plant projects to process gas for delivery to the Master Gas System and on to domestic markets.
• 2001 Hawiyah Gas Plant, capable of processing up to 1.6 billion standard cubic feet per day of non-associated gas, comes on stream.
• 2003 Haradh Gas Plant completed two and a half months ahead of schedule.
• 2004 HRH Crown Prince 'Abd Allah ibn 'Abd Al-'Aziz Al Saud, First Deputy Prime Minister and Head of the National Guard, inaugurates the 800,000 barrel-per-day Qatif-Abu Sa'fah Producing Plants mega project. In addition to the crude, the plants provide 370 million standard cubic feet of associated gas daily.
• 2005 Saudi Aramco and Sumitomo Chemical Co., Ltd. sign a joint venture agreement for the development of a large, integrated refining and petrochemical complex in the Red Sea town of Rabigh, on Saudi Arabia's west coast. Saudi Aramco sells its 50-percent share of Motor Oil (Hellas) Corinth Refineries and Avinoil back to the Vardinoyannis family.
• 2006 Saudi Aramco and Sumitomo Chemical broke ground on PETRORabigh, an integrated refining/petrochemical project. Haradh III was completed, yielding 300,000 bpd of oil. Accords were signed for two export refineries -- Jubail (with Total) and in Yanbu' (with Conoco-Phillips).

Present

Saudi Aramco's Core Area in Dhahran City

From its headquarters in Dhahran on the eastern shores of the Arabian Peninsula, Saudi Aramco manages virtually all of Saudi Arabia's enormous hydrocarbon enterprise. From the giant Ghawar and Safaniya oil fields, the world's largest onshore and offshore fields, to the leading-edge technology at the Exploration and Petroleum Engineering Center, and from one of the largest and most modern fleets of supertankers to refining and marketing joint ventures around the globe, Saudi Aramco is positioned to continue to play its leading role in meeting the world's demand for oil. Saudi Aramco is responsible for 99 percent of the Kingdom's proven crude oil reserves of 259 billion barrels (41.2 10¹⁰m³) -- about a quarter of the world's total conventional oil reserves. That is more than double the total of Iraq, the country with the world's second largest conventional oil reserves, and nearly 12 times the reserves of the United States. Saudi Aramco produces and exports more crude oil than any other company. Recent production has averaged some 8 million barrels (1,300,000 m³) per day. That is more than twice the output of the next highest producer and nearly five times greater than the largest U.S. oil company.

Saudi Aramco maintains a maximum sustained crude production capacity of 8.5 million barrels per day. Saudi Aramco ranks among the top ten companies in gas production worldwide. The company is also a leader in both the production and export of natural gas liquids (NGL), and a major producer of refined products. The company produces natural gas in association with crude oil and nonassociated gas from deep, independent gas fields. This gas is used as fuel and feedstock for the Kingdom's backbone industries and utilities, and for export and domestic consumption as NGL. A vigorous programme is currently under way to expand gas production and processing capabilities to meet increasing demand for gas at home to power the Kingdom's robust domestic economic growth.

Saudi Aramco's oil operations encompass the Kingdom of Saudi Arabia, including territorial waters in the Persian Gulf and the Red Sea. Totaling more than 1.5 million square kilometres, this area is larger than the combined areas of Texas, California, Oklahoma and Utah, or of France, Spain and Germany. Most production comes from fields in the coastal plains of the Eastern Province in an area extending 300 kilometres north and south of Dhahran.

In May 2005, a Saudi Aramco VP announced Aramco's plans to build projects worth about 487.5 billion Saudi Riyals (US $130 billion) in the next 5 years. Due to the unprecedented global demand for oil, Aramco announced that the number of its oil rigs will double by the end of 2006 [1].

Operation

Saudi Aramco has begun performing tasks that were previously conducted by the American companies in the region. The company has attempted to produce an independent environment; it has begun to perform critical tasks itself, while contracting secondary tasks to companies in the region.

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) ^[3] to assist in processing the colossal quantity of data obtained during exploration. In 2001, Saudi Aramco decided to use Linux clusters as a replacement for the decommissioned Cray systems.

Drilling & Work over

This is the most crucial process and as such accounts for the largest segment of the Saudi Aramco workforce. Drilling new wells efficiently and then maintaining them requires the company to employ a large number of petroleum engineers. Due to the recent surges in oil demand, Saudi Aramco has been pressed to produce more oil and therefore has (and still is) hired several petroleum engineers and geo-scientists.

Refining and Distribution

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 July 1, 1993, the government issued a royal decree merging Saudi Aramco with Samarec, the country's oil refining company ^[4]. Since then, Saudi Aramco has taken on the responsibility of refining oil and distributing it in the country.

Shipping

Saudi Aramco has employed several tankers to ship crude oil, refined oil and gas to various countries. It has created a wholly-owned subsidiary company, Vela International Marine Limited, to handle shipping to North America, Europe and Asia.

Research & Development

Saudi Aramco has taken a keen interest in optimizing its processes over the last decade. To this end, it has employed hundreds of engineers and scientists specializing in different aspects of the hydrocarbon industry.

Other services

Saudi Aramco also provides several services to its employees. It maintains a large hospital and provides health insurance for its employees. It also maintains several fire stations, both industrial and residential. Saudi Aramco introduced its Industrial Security over two decades ago. This security force primarily ensures the safety of the company's industrial and residential areas.

Saudi Aramco has operations all over the kingdom and therefore, it often needs to transport employees between operations. It therefore maintains an aviation department with a fleet of over 150 aircrafts and over 45 helicopters.

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