Oilfield Service Companies: Saudi Aramco

Saudi Aramco, officially the Saudi Arabian Oil Company, is a Saudi Arabian national oil andnatural gas company based in Dhahran, Saudi Arabia. Saudi Aramco was estimated to be worth $781 billion in 2005, making it the world's most valuable company.

Saudi Aramco has both the largest proven crude oil reserves, at more than 260 billion barrels (4.1×10¹⁰ m³), and largest daily oil production. Headquartered in Dhahran, Saudi Arabia, Saudi Aramco operates the world's largest single hydrocarbon network, the Master Gas System. Its yearly production is 7.9 billion barrels (1.26×10⁹ m³),and it managed over 100 oil and gas fields in Saudi Arabia, including 279 trillion Standard_cubic_foot" style="background-image: none; color: rgb(6,69,173); text-decoration: none; background-origin: initial; background-clip: initial" title="Standard cubic foot">standard cubic feet (scf) of natural gas reserves. Saudi Aramco owns the Ghawar Field, the world's largest oil field, and theShaybah Field, one of the world's largest oil fields.

History

The origins of Saudi Aramco traces back to 29 May 1933, when the Saudi government granted a concession to Standard_Oil_of_California" style="background-image: none; color: rgb(6,69,173); text-decoration: none; background-origin: initial; background-clip: initial" title="Standard Oil of California">Standard Oil of California (SoCal) in preference to a rival bid from the Iraq Petroleum Company. The concession allowed Socal to explore for oil in Saudi Arabia. SoCal assigned this concession to a wholly owned subsidiary called Standard_Oil" style="background-image: none; color: rgb(6,69,173); text-decoration: none; background-origin: initial; background-clip: initial" title="California-Arabian Standard Oil">California-Arabian Standard OilCo. (CASOC). In 1936, with the company having had no success at locating oil, the Texas Oil Company (Texaco) purchased a 50% stake of the concession.

After four years of fruitless exploration, the first success came with the seventh drill site in Dammam, a few miles north of 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 Company to Arabian American Oil Company (or Aramco). In 1948, Socal and Texaco were joined as investors by Standard_Oil_of_New_Jersey" style="background-image: none; color: rgb(6,69,173); text-decoration: none; background-origin: initial; background-clip: initial" title="Standard Oil of New Jersey">Standard Oil of New Jersey (Esso) which purchased 30% of the company, and Mobil_Oil" style="background-image: none; color: rgb(6,69,173); text-decoration: none; background-origin: initial; background-clip: initial" title="Mobil Oil">Socony Vacuum (later Mobil) which purchased 10% of the company, leaving Socal and Texaco with 30% each.

In 1950, King Abdul Aziz Ibn Saud threatened to nationalize his country's oil facilities, thus pressuring Aramco to agree to share profits 50/50. A similar process had taken place with American oil companies in Venezuelaa 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 Ibn Saud. In the wake of the new arrangement, the company's headquarters were moved from New York to Dhahran.

In 1973, following US support for Israel during the Yom Kippur War, the Saudi Arabian government acquired a 25% stake in Aramco. It increased its shareholding to 60% by 1974, and finally took full control of Aramco by 1980, by acquiring a 100% percent stake in the company. Aramco partners continued to operate and manage Saudi Arabia's oil fields. In November 1988, a royal decree changed its name from Arabian American Oil Company to Saudi Arabian Oil Company (or Saudi Aramco) and took the management and operations control of Saudi Arabia's oil and gas fields from Aramco and its partners. It officially cut all oil supply to Israel the same year, by order of the CEO. Following the events that unfolded in 1988, Saudi Aramco has become a fully owned, privately held company. Saudi Aramco is currently the world's largest company with an estimated market value of $781 billion (2005). Concerns for monopolization of the world's economy have been raised.

Timeline

1940s film about oil-drilling in Saudi Arabia, sponsored by Aramco and Standard Oil Company of California

Part 2

• 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 (which became Texaco, and now Chevron) 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 (which became Exxon and now ExxonMobil) and Socony-Vacuum Oil (which became Mobil and now ExxonMobil) join Socal (now Chevron) and Texaco (now Chevron) 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 breakequivalent to 50% of oil profits, a deal known as the Golden gimmick.
• 1956 Aramco confirms scale of Ghawar and Safaniya, the largest onshore and the largest offshore field in the world, 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.
• 1988 Oil supply to Israel is officially ceased by order of the President and CEO.
• 1989 High-quality oil and gas are discovered south of Riyadh — the first find outside original operating area.
• 1991 Company plays major role combating Gulf War oil spill, the world's largest.
• 1992 East-West Crude Oil Pipeline capacity is boosted to 5 million barrels (790,000 m³) per day. Saudi Aramco affiliate purchases 35% interest in SsangYong Oil Refining Company (S-Oil) in 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). The company also assumed the Saudi Arabian government's 50% share of the Jubail export refining company, which becomes the Saudi Aramco Shell Refining Company (SASREF).
• 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.Abdullah 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 the first in the world for the 11th straight year, for the country's crude oil reserves and production. Aramco Gulf Operations Limited is established to administer 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 to domestic markets.
• 2001 Hawiyah Gas Plant, capable of processing up to 1.6 billion scf 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 (130,000 m³/d) Qatif-Abu Sa'fah Producing Plants mega project. In addition to the crude, the plants provide 370 million scf 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. This becomes known as Petro Rabigh.
• 2006 Saudi Aramco and Sumitomo Chemical break ground on Media:PETRORabigh, an integrated refining/petrochemical project. Haradh III completed, yielding 300,000 bbl/d (48,000 m³/d) of oil. Accords signed for two export refineries—Jubail (with Total) and in Yanbu' (with Conoco-Phillips).
• 2007 Saudi Aramco subsidiary Saudi Aramco Sino Co. Ltd. signs agreements with Mobil" style="background-image: none; color: rgb(6,69,173); text-decoration: none; background-origin: initial; background-clip: initial" title="ExxonMobil">ExxonMobil, Sinopec Corp and the Fujian Provincial Government of China to form two joint ventures: Fujian Refining and Petrochemical Co. Ltd., a refining and petrochemicals venture, and Sinopec SenMei (Fujian) Petroleum Co. Ltd. (SSPC), a marketing venture.
• 2008 Saudi Aramco celebrates the 75th anniversary of the May 29, 1933, signing of the oil concession between the Kingdom of Saudi Arabia and Standard Oil of California (Socal). King Abdullah visits Dhahran to celebrate the 75th anniversary.
• 2009 CEO inaugurates KAUST, King Abdullah University of Science and Technology, where many high profile guest, state leaders, kings, and scholars attended the ceremony.
• 2009 Saudi Aramco reaches 12 Mbbl/d (1,900,000 m³/d) capacity after completing an expansion program. Also,Petro Rabigh, the company's first petrochemical plant (a partnership with Sumitomo Chemicals Co., Ltd., begins production.
• 2010 Saudi Aramco unveils GigaPOWERS™ and runs a first field test of Resbots™.^[19]
• 2011 Saudi Aramco starts production from Karan Gas Field, with an output of more than 400 million scf per day.^[20]
• 2011 Saudi Aramco is officially named the world's largest and most valuable privately owned company. Saudi Aramco is said to be monopolizing the world's energy market.
• 2011 Aramco raised selling prices for all crude grades for customers in Asia and Northwest Europe for April shipments and cut prices for customers in the U.S.^[21]
• 2012 Aramco was ranked by Forbes as the first among the World's largest oil companies.^[22]

Operation

Headquarters of Aramco Services Company in Houston

Saudi Aramco is headquartered in Dhahran; and its operations span the globe which include exploration, producing, refining, chemicals, distribution and marketing.

[edit]Exploration

A significant portion of the Saudi Aramco workforce consists ofgeophysicists 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" style="background-image: none; color: rgb(6,69,173); text-decoration: none; background-origin: initial; background-clip: initial" title="Cray">Cray Supercomputers (CRAY-1M) in its EXPEC Computer Center (ECC)^[23] 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 newsupercomputing system in late 2009 with a disk storage capacity of 1,050 terabytes (i.e, exceeding onepetabyte), the largest storage installation in Saudi Aramco's history to support its exploration in the frontier areas and the Red Sea.^[24]

Drilling

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 engineers. With the increasing global demand for oil, Saudi Aramco seeks to expand its oil production. To do this the company seeks to expand the number of engineers and geo-scientists it employs.

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 July 1, 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 Corporation, the largest crude oil refiner and marketer in the Philippines.[11] Since then, Saudi Aramco has taken on the responsibility of refining oil and distributing it in the country.

Currently, Saudi Aramco's refining capacity is more than 4 million barrels per day (640,000 m³/d) (International joint and equity ventures: 2,060 Mbbl/d (328,000,000 m³/d), domestic joint ventures: 1,108 mpbd, and wholly owned domestic operations: 995 Mbbl/d (158,200,000 m³/d).) This figure is set to increase as more projects go online.^[4]

Additionally, 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.

List of refineries

List of domestic refineries:^[4]

• Jeddah Refinery (60,000 bbl/d (9,500 m³/d) nominal capacity)
• Ras Tanura Refinery (includes a Crude Distillation Unit, a Gas Condensate Unit, a hydrocracker, and catalytic reforming.
• Riyadh Refinery
• Yanbu Refinery

List of domestic refining ventures:^[4]

• The Saudi Aramco Mobil Refinery Company Ltd. (SAMREF), Yanbu
• The Saudi Aramco Shell Refinery Company (SASREF), Jubail
• Petro Rabigh, Rabigh
• Saudi Aramco Lubricating Oil Refining Co. (Luberef)
• Saudi Aramco Total Refining and Petrochemical Company (SATORP), Jubail^[25]
• Yanbu Aramco Sinopec Refinery (YASREF), Yanbu 11 July 2012

List of international refining ventures:^[4]

• Fujian Refining and Petrochemical Company (FRPC), People's Republic of China
• Sinopec SenMei (Fujian) Petroleum Co. Ltd. (SSPC), People's Republic of China
• Motiva Enterprises LLC, United States
• Showa Shell, Japan
• S-Oil, Republic of Korea