Aramco- The Unsung Hero

While I was at a social function in Khobar, over the span of the two hours I was sitting at the dinner table, an entire seventy-five minutes of the conversation was dedicated to Saudi Aramco. I was surrounded by Saudi Aramco-ees; to my right a petroleum engineer, my left a systems engineer, and across the table a finance engineer. All graduates of top tier western universities and each was extremely passionate about the topic and spoke with such reverence about what seemed to be a noble man not a national company.

Of course I have heard about Saudi Aramco, and know of its local respect and international supremacy in the hydrocarbon and energy industry, but in Jeddah it doesn’t have the same dominion it does in the East; it looms in the performance of other companies yet it is the forklift of the Saudi economy, carrying it above recessionary pulls. Aramco is the ambassador Saudi company to the West; it is after all regarded as the leader of OPEC, but I never felt the immense importance it has in shaping local and international policy- and boy oh boy is it immense. I took it upon myself to learn about the company that anchors the Saudi economy against economic turbulence, and how much it truly does shape the Saudi economic terrain.
Saudi Aramco, a national energy company, is the world’s largest corporation and its largest oil exporter. In an interview with Middle East Magazine, Dawood M. AlDawood, the vice president of Saudi Aramco, revealed that Aramco will spend $120 billion in the next five years to ensure adequate supplies and to help find new ways to reduce carbon emissions. But what will come of the oil and gas producer giant in the wake of economic recovery, growing concern over the oil spillage in the Gulf of Mexico, and as we enter what I would call the “Green Revolution”, the heightened awareness of the environmental depredation caused by the burning of fossil fuels?

The Organization for Economic Cooperation and Development (OECD), and other international organizations, has reported a steep drop in the world’s demand for oil as a result of the economic downturn. Last year, for the first time since 1981, global energy consumption declined significantly; oil demand fell by 1.7% in 2009, compared to a drop of just 0.2% in 2008, reported Aramco. What continues to depress oil demand is the slowed manufacturing and production of goods (due to decreased demand for goods and tight credit markets), weakened consumer spending (due to an increase in savings and lower purchasing power fuelled by falling incomes). The International Energy Agency anticipates that oil will recover this year as the world pulls out of the recession, and that by 2030, oil demand will rise from the 2008 level of 85 million barrels a day (b/d) to 105 million b/d. “One of the strongest demand-rebound factors,” proclaims Dawood, “is very likely to be emerging markets like China, India and other developing countries, as well as the Middle East.” Therefore, despite the current low-margin cycle, the volatile price environment and economic uncertainties, Saudi Aramco is continuing to invest across the hydrocarbon value chain to support global supply efforts.

As the Gulf of Mexico is bleeding black, causing widespread damage to the flora and fauna of the Atlantic coast of the American continent, and as the “Inconvenient Truth” resonates in the pathways of destructed forests and rises with the greenhouse gases, environmental constraints are likely to place oil in a less favorable demand position vis-à-vis other fuels that have lower carbon emissions. Placing oil in a less favorable demand position means that there would be a decline in revenue for the oil conglomerate, an erosion of profits and rising worries that the Saudi economy will be significantly weakened, and with it its local companies. However, Dawood confirmed that, “through 2030, fossil fuels will account for more than 77% of the demand increase, and the lion’s share of this energy pie will continue to belong to oil.”

Sigh of relief? Not quite, because Aramco is still an ethical company that cares about the destruction that burning fossil fuels is causing to our Earth. “Saudi Aramco is leveraging technology to minimize the environmental impact of hydrocarbons, including,” Dawood goes on to say, “desulphurization of crude oil, cleaner fuels, smokeless flares and research & development solutions to address greenhouse had emissions from petroleum use.” It s therefore by no surprise that Saudi Aramco recently won the International Energy Company of the Year award for its excellence in global energy at Hart Energy Publishing’s Refining & Energy Company of the Year Awards. Hart Energy Publishing considers three primary criteria for awards: cleaner environment, investment and corporate growth, and global vision. Saudi Aramco received the award by showing excellence in its continued commitment to expanding natural gas and oil production capacity, its progress in downstream integration, and its extension of research and development capacities. As for alternative energies, Aramco is collaborating with the Kingdom’s newest graduate research institution, KAUST, with a mission to focus on alternative energy solutions, including solar energy and energy conservation. “Together, KAUST and Saudi Aramco are working to leverage our nation’s abundance of continuous sunshine and plentiful silica for solar panels,” Dawood asserts and went on to say, “and the Kingdom hopes in the near future to export as much solar energy as it now exports oil.” How about that food for thought- the idea that Saudi Arabia will always be regarded as an energy exporter, whether in terms of black gold or golden rays.

According to Saudi Aramco there are many untapped oil reserves, but at the pace we are going at now the Saudi economy should remain hovering comfortably above worries of an economic crisis. In a tax-less country, companies can rest assured to expand their businesses without worries of needing international bailout and rescue, and, quite the contrary, the Saudi market is attracting international companies from different industries, including banking, to open up shop in Saudi. For instance, Lazard Asset Management has recently been granted a license by the CMA to begin operations, and Citi Bank has submitted its application to SAMA. Saudi Arabia is a “hot spot” for companies and Aramco has everything to do with it.

It is no wonder those Aramco-ees speak loftily of their company, it deserves the respect it earns.