Saudi Aramco Downstream Roles and Activities

This report discusses the roles and activities of Saudi Aramco in the downstream sector of the oil and gas industry. It also explores the macro factors affecting the organization and its contributions to indigenous people and local communities.

OIL AND GAS
ENVIRONMENT
Student number:49861
CINDY YULIETH
BARRIOS
RAMIREZ
Module Leader
Fiona Ogorie

Oil and Gs Environment
Lecturer Fiona Oghorie
Table of Contents
INTRODUCTION.................................................................................................................................1
LO 1 and LO 2 - Saudi Aramco Downstream Roles and activities........................................................2
Lo 3 Macro factors or elements affecting the cited organisation are described as below -.....................4
LO 4 Contribution to the indigenous people and to the local communities............................................5
CONCLUSION.....................................................................................................................................5
REFERENCES......................................................................................................................................6
0
2018

Introduction
In this report is going to emphasis in Saudi Aramco. Saudi Aramco is an oil and gas company
founded in 1933 after signed an agreement with Standard Oil of California (SOCAL) to give
permission to explore for oil in this country, SOCAL is a company controlled by California
Arabian Standard Oil Company (CASOC) which is based in San Francisco this company was
delegate the mission to explore. To accomplish this mission the Texas company (after named
Texaco) took possession of half of CASOC IN 1936, and in 1944, the company was renamed
the Arabian American oil company, or Aramco. Standard Oil Company (later Exxon)
and Socony-Vacuum Oil Company (later Mobil) became part owners in 1948 to provide help
with marketplace and investment for the massive hydrocarbons reserves in Saudi Arabia.
Aramco’s head offices move from San Francisco to New York as part of the change in
ownership. The company maintained a few offices in the US to do jobs like recruiting,
purchasing, shipping and other functions in support of the operations in Saudi Arabia. “In
1952, Aramco’s headquarters – including many officers and executive staff – moved to
Dhahran, Saudi Arabia, and in 1980, the Saudi government completed its gradual buyout of
Aramco’s assets. In 1988, the successor company was established as the Saudi Arabian Oil
Company (Saudi Aramco)” (Aramco, 2018).
Saudi Aramco is the biggest oil company in the world, Saudi Aramco headquartered in
Dhahran. Saudi Aramco “state that the produce one out of every eight barrels of oil in the
world, or about 12% of global production more than any other single producer” (Petroff,
2016)
The oil and gas industry are divide in to three major components: Upstream, Midstream and
downstream. In this report is emphasis in downstream and what are the roles and activities
and how Saudi Aramco work in this sector. Downstream involves: “oil refineries,
petrochemical plants, petroleum products distributors, retail outlets and natural gas
distribution companies” (PSAC, 2018)
PESTLE analysis applies to identify the risk in each factor and used as acknowledge to make
important decision in companies. PESTLE analysis is about “Political, Economic, social,
Technological, Legal and Environmental factors” (Ebooks, 2013).
Oil and gas development brings challenges to communities positive and negative like “Noise
pollution, Light Pollution Water pollution, Air pollution and Local Economy. Companies
must work together with the community affected by bringing Constructive Engagement,
Collaborative Processes, Community Resources” (BMP, 2018).
This report is going to state how Saudi Aramco work in the oil and gas downstream sector
discuss the roles and activities involved also discuss PESTLE analysis emphasising in
Economic and Environmental factors, discuss how Saudi Aramco is working with
communities and the contributions that are bringing back to them.
LO 1 and LO 2 - Saudi Aramco Downstream Roles and activities
“Downstream sector, involves the actual processing, and selling and distribution of natural
gas and oil based products” (STI, 2013). Downstream is the process where crude get
manufactured after distributing and finally get to the consumer(Rahm and et.al, 2014)
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Figure 1. Representation of upstream, midstream, and downstream industry (Education,
2018)
Saudi Aramco to consider various initiatives to develop the downstream business. In the
domestic arena, Rabigh Refinery Development, a major 400,000 barrels per day refining and
petrochemical complex currently in the construction phase. Other refining and petrochemical
initiatives currently in the early planning and engineering stage include two 400,000 barrels
per day export oriented refineries and a petrochemical complex integrated with the 550,000
barrels per day Ras Tanura refinery. In addition, Saudi Aramco is actively pursuing technical,
research, and commercial development in oil desulphurization, product quality, and process
unit improvements (Economist, 2017).
Refining
“Once crude oil is extracted from the ground, it must be transported and refined into
petroleum products that have any value. Those products must then be transported to end-use
consumers or retailers (like gasoline stations or the company that delivers heating oil to your
house, if you have an oil furnace” (Energy, 2018)
Saudi Aramco have 5 refineries
 Riyadh Refinery (Saudi Aramco), 120,000 bbl/d (19,000 m3/d)
 Jeddah Refinery (Saudi Aramco), 100,000 bbl/d (16,000 m3/d)
 Yanbu' Refinery (Saudi Aramco), 225,000 bbl/d (35,800 m3/d)
 Jazan Refinery (Saudi Aramco, opens 2016), 400,000 bbl/d (64,000 m3/d)
 Ras Tanura Refinery (Saudi Aramco), 550,000 bbl/d (87,000 m3/d)
Also have another 5 in partnership with other companies
 Rabigh Refinery (Saudi Aramco/Sumitomo), 400,000 bbl/d (64,000 m3/d)
 Yanbu' Refinery (SAMREF) (Saudi Aramco/Exxon Mobil), 400,000 bbl/d
(64,000 m3/d)
 Jubail Refinery (SATORP) (Saudi Aramco/Total), 400,000 bbl/d (64,000 m3/d)
 YASREF Refinery (Yanbu, KSA) (Saudi Aramco/Sinopec), 400,000 bbl/d
(64,000 m3/d)
 Jubail Refinery (SASREF) (Saudi Aramco/Shell), 305,000 bbl/d (48,500 m3/d)
“Saudi Arabia is the largest oil producer within the Organisation of Petroleum
Exporting Countries (OPEC) and the world’s second-largest oil producer after Russia.
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Saudi oil output fell from the record high of 11.7 MBD in 2015 to 10.5 MBD in 2016
after OPEC and non-OPEC producers agreed to output cuts” (Research, 2018)Juliusson
and et.al, 2017).
Saudi Arabia is the 25th largest export economy in the world and the 62nd most
complex economy according to the Economic Complexity Index (ECI). In 2015,
Saudi Arabia exported $182B and imported $167B, resulting in a positive trade
balance of $15.6B. In 2015 the GDP of Saudi Arabia was $646B and its GDP per
capita was $53.5k. The top exports of Saudi Arabia are Crude
Petroleum ($100B), Refined Petroleum $18.4B (OCE,2018)
Distribution and Marketing of refined products
The cited oil refinery is operating between two multinational and liquid commodity
markets: refined products and crude oil. As every product streams have their own
short-term dynamics, along with prices developed in the global market. While
refining is an astounding method, the goal is clear: to take crude oil, which is in every
way that really matters unusable in its basic state, and change it into the wide
grouping of oil based products used for a combination of purposes, for instance,
warming homes, filling vehicles and running industry. After the oil taking care of is
done, downstream development incorporates the business side of getting the oil things
to the market for flow and purchaser use. An extensive part of the genuine
associations related with the midstream development of transportation and limit are in
like manner the key players in refining, advancing and apportionment works out.
After the oil has left the tanker, it enters a web maze of channels, tubes, towers, and
tanks, which is a refinery. Most refineries run twenty-four hours for each day. Crude
oil is at first set away for a time period to empower water in the oil to confine out and
be pulled in off going before refining.
Promoting is the rebate and retail scattering of refined oil based products to business,
industry, government and open purchasers. The cost paid by clients is capriciously
associated with how oil is the huge result of general trade. Toward the day's end, the
oil business is affected by budgetary and political conditions. Distinctive parts
affecting expense are settle utilize rates and oil contracts(Cordes and et.al, 2016).
Generally crude oil and oil based products stream to the business parts that
give the most imperative impetus to the supplier, which ordinarily infers the nearest
advertise first in light of the slightest transportation cost and higher net salary for the
supplier. Eventually, regardless, the trade stream may not take after this case in view
of various segments that may impact the stream, for instance, refining set-ups, thing
demand mix, and thing quality conclusions. There are similarly differentiates in Saudi
Arabia commonplace trade that are the eventual outcome of various conditions, for
instance, the uneven scattering of both creation and refining over the United States.
Fuel advantage stations handle most of these arrangements and oil associations offer
their oil based wares particularly to generation lines, control plants, and
transportation-related efforts. The oil business is one of the greatest private managers
in the Saudi Arabia besides, only a few greatest oil firms handle about bit of oil made,
refined and sold in the Saudi Arabia(Gregory and et.al 2015).
Lo 3 Macro factors or elements affecting the cited organisation are
described as below -
• Political and legitimate elements with regards to Saudi Aramco association, political and
lawful components have some positive and effect on the task and practices. The vast majority
of the choice which incorporates laws, government impedance and lawful system are gainful
for long haul survival of business efforts. At the point when firm works its business then it
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needs to think about legitimate control and standards of the nation. This administrative system
gives insurance and security to business, its workers and shopper too(Coday and et.al, 2015).
According to legitimate control, it has a few demonstrations which primary goal is to render
some sort of assurance to firm. Saudi Aramco utilize these variables as the direction for their
business. Furthermore, political ones are likewise considered as the shield to secure firms,
shoppers and the enthusiasm of the public. With regards to negative effect, political condition
depends on the vulnerability, in this way statistic nations consists of number of political
gatherings. That gatherings aren't got clear dominant part to frame government.
• Social and social elements Social and social condition is a vital segment that ought to be
broke down while planning organization business methodologies and practices. With regards
to Saudi Aramco, purchaser taste, inclination, decision, their pay and training level
dependably needs to considered. On the off chance that organization is disregarding these
angles then it can affect the deals and productivity. The positive effect of these variables is
that it is identified with human relationship and social esteem. Through this part organization
can construct a solid brand picture in the market and in addition it can build up a solid
association with them. An association can unsuccessful because of suitable methodologies
and successful usage of social condition factor. The distinction in dialects some time
represents a major issue for business efforts(Blake and et.al, 2018).
• Technology - Technology assume an exceptionally critical part for each business efforts
keeping in mind the end goal to generation, organization, correspondence, showcasing and
other viewpoint. Sat each division and administration level innovation is extremely basic and
vital part. With regards to Saudi Aramco, without innovation it might unfit to operate its
business and showcasing exercises. With help of this factor, organization can create
advancement, imagination and different exercises inside couple of hours. Some time it
postures major issue because of incessant changes in innovative headway. Further, the
varying mechanical condition of different markets or nations might be called for creation
alteration.
• Natural - It incorporates common sources, for example, climate, atmosphere condition, air,
water and environment. Atmosphere and climate condition influence the area of enterprises. .
The Saudi Arabia is rich in natural resources such as oil it helps the organisation in producing
more and more refined oil which is positively affecting the profitability of the firm.
LO 4 Contribution to the indigenous people and to the local
communities
The oil industry is a highly profitable sector contributing to the economy of a community or
country, the Saudi Aramco is one of the leading organisation within the oil refineries sector.
• The organisation produces a huge quantity of oil for selling it into local as well as
international market. The profit earned by the company is adding to the economy of Saudi
Arabia, oil industries are the main elements or reason for the development of Saudi
Arabia(Werner and et.al, 2017).
• It earns a huge profit in the global market as oil is exported to other countries as well. The oil
refineries also creates a lot of job opportunities for the local people in the community which
also contributes in the development of the society and well-being of the people.
CONCLUSION
The above report determined that Saudi Aramco is a leading oil industry in Saudi Arabia that
is contributing to the economy of the country as well as promoting job opportunities. The report also
identified various macro environmental factors that are affecting business operations of Saudi
Aramco, such as natural, political, legal etc. The report also provided brief information about the
distribution and marketing techniques of the oil refineries.
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REFERENCES
Books and Journals
Blake, J.M., Miltenberger, K., Stewart, A.M., Ritchie, A., Montoya, J., Durr, C., McHugh, A. and
Charles, E., 2018.Assessment of water resources and the potential effects from oil and gas
development in the Bureau of Land Management Tri-County planning area, Sierra, Doña Ana,
and Otero Counties, New Mexico (No. 2017-5151). US Geological Survey.
Coday, B.D., Almaraz, N. and Cath, T.Y., 2015. Forward osmosis desalination of oil and gas
wastewater: Impacts of membrane selection and operating conditions on process
performance. Journal of Membrane Science, 488, pp.40-55.
Cordes, E.E., Jones, D.O., Schlacher, T.A., Amon, D.J., Bernardino, A.F., Brooke, S., Carney, R.,
DeLeo, D.M., Dunlop, K.M., Escobar-Briones, E.G. and Gates, A.R., 2016. Environmental
impacts of the deep-water oil and gas industry: a review to guide management
strategies. Frontiers in Environmental Science, 4, p.58.
Gregory, K. and Mohan, A.M., 2015. Current perspective on produced water management challenges
during hydraulic fracturing for oil and gas recovery. Environmental Chemistry,12(3), pp.261-
266.
Juliusson, L.M. and Doherty, K.E., 2017. Oil and gas development exposure and conservation
scenarios for Greater sage-grouse: Combining spatially explicit modeling with GIS
visualization provides critical information for management decisions. Applied geography, 80,
pp.98-111.
Rahm, B.G. and Riha, S.J., 2014. Evolving shale gas management: water resource risks, impacts, and
lessons learned. Environmental Science: Processes & Impacts, 16(6), pp.1400-1412.
Werner, S., 2017. Adapting Total Rewards to Industry Factors: The Case of the Oil and Gas Industry.
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