In the spotlight: Saudi Aramco

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OUTGOING: Abdallah Jumah was Saudi Aramco’s president and CEO for 14 years.

A closer look at the national oil company charged with combining state building with profits.

Headquartered in Dhahran, Saudi Arabia, the scope of Saudi Aramco's operations is vast, comprising almost the entire oil output of Saudi Arabia. Reserves of conventional crude oil in company-managed fields total around 259.9 billion barrels and known gas reserves in the public sphere total 249 trillion ft³.

Given its dominance, the state company faces the challenge of single-handedly enhancing the country's oil production, and boosting receipts. Thankfully, help is at-hand with gas production - Aramco has formed partnerships with a number of international oil companies (IOCs).

The company's operations encompass land totalling more than 1.5 million km², including territorial waters in the Arabian Gulf and the Red Sea. Most production comes from fields in the coastal plains of the Eastern Province in an area extending 300 km north and south of the Dhahran oil city.

Among those fields fully owned by the company are the Ghawar Field, the world's largest field overall; the Safaniya Field, the world's largest offshore field; and the Shaybah Field, one of the world's largest of its kind.

By most conventional benchmarks, Saudi Aramco is by far the world's most profitable company.

Undoubtedly, there still remains considerable untapped oil and gas potential at Aramco's disposal; large stretches of territory remain unexplored. Seizing such opportunities desperately requires additional investment.

Expansion

The head of the Saudi Aramco group confirmed in February 2008 that Saudi Arabia's ambitious plans to expand oil and refining capacity are on track. Economic turmoil and the promotion of alternative fuels such as ethanol have, however, clouded the future of global oil demand somewhat.

Saudi Aramco announced plans in May 2008 to invest US$129 billion in new energy projects over the next five years. Such investment will focus on the expansion of crude oil, natural gas, and refining capacity.

Khalid al-Falih, who assumed the role of CEO and president at Aramco on January 1st, said in 2008 that $70 billion of the total had been earmarked for international and domestic joint ventures. This leaves around $59 billion for projects led solely by Aramco.

The figure of $129 billion is nearly $40 billion higher than previous official estimates of Saudi investment over the next five years, which stood at $90 billion. Al-Falih said Aramco was focusing on downstream capacity development, believing that this area offers the greatest potential for future growth.

In order to increase E&P in the gas sector, Aramco has enlisted the help of a number of IOCs and this looks set to continue. "I do not see why they would not take further steps to involve IOCs. They have now broken through the psychological barrier - especially with the Empty Quarter blocks," explains Catherine Hunter, research manager at Global Insight.

"In contrast, I don't think there's is any chance at all of them involving international companies in oil projects. If you look at their current schedule, this would be the time that they would seek outside support if they were going to and they have not," adds Hunter.

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