government in its home country
 Usage of advanced technologies
 Lower cost of production
 Lack of transparency regarding
corporate governance
Opportunities
 High price of crude oil
 Sufficient capital to invest
 Increasing demand of crude oil across
the globe
Threats
 Constant emphasis on the renewable
and non- conventional energy sources
 Prospective slow down of crude oil
because of the recent increased price of
oil
One of the biggest strengths of Saudi Aramco is its strong financial backbone. In the first half of
2019, the company announced its net income which was around $ billion (in the 1st half of 2019)
(Saudi Arabian Oil Co., 2019). Beside this, the free flow of cash for the same period was $38
billion with a reduced capital expenditure at $14 billion. Apart from this, the company enjoys a
low cost production due to the greatest number of oil fields throughout the nation being free
flowing (EIA, 2019). This has lowered the cost of production to as low as $3.5 per barrel. Also,
the company used advanced technologies at each step of production process along with enjoying
operational autonomy. Despite all its strengths, it still has some weaknesses including its core
dependence on crude oil, which in a way can make it vulnerable to threats like facing loss if the
demand of non-conventional energy sources increases. On the other hand, the increasing the
current increasing oil price as well as demand can pose as great opportunities for Saudi Aramco.
Also, due to the current boost in cost of oil, Saudi Aramco has the prospective of getting enough
funds of their capital investment.
-Porter’s Five Force
The application of Porter’s Five Forces could prove to be effective in providing an overview of
the market condition and situation of Saudi Aramco in the O&G industry.
4

Case Study | Overview of Saudi Aramco

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