final report
helpmeout11
20170908173454coop_final_report.pdf
BSc in Finance
(Internal Control over Saudi Aramco’s Invoices)
Operation Accounting Department, Export Sales Division at
Saudi Aramco.
COOP
Final Report
25th of May, 2017
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Declaration:
This report was prepared on the basis of my own work. Where other published and unpublished
source materials were used, and been acknowledged.
Word Count: 11,144 Words
Student Name:
Date of Submission:
Signature:
Co-op Advisor:
Saudi Aramco Supervisor:
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Executive Summary:
The main goal of this report was to document and describe the experience and work I have
done during my Cooperative Program (COOP). I have done my COOP period with Saudi Aramco
in which I was assigned to Operation Accounting Department (OAD). My task in OAD was to
analyze and prepare the important documents that are under OAD’s control, such as; Prices,
Invoices and Reports.
As a result, I prepared this report to show readers how we relate Finance & Accounting Science to
types of invoices we used in OAD. In general, this report aimed to provide the reader with a full
picture of the financial process used by OAD to approve Prices, Invoices and Reports. In addition,
the report linked these practical concepts to the academic courses that I learned in college.
Firstly, this report started with an introduction of Saudi Aramco and its departments. Secondly, a
fully description of my job history and assignments that reflects the experience I gained. Thirdly,
the evaluation of the cooperative training program was defined in detail. Then, a list of the Online
Cources and Sessions during my COOP period in Aramco was provided. Finally, the Oil Prices
Collapse and its Effect on Saudi Aramco followed up with conclusion.
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Acknowledgements:
My acknowledgement firstly goes to Allah for the excellent opportunity I got that helped me
in gaining such experience that would help me in the future either in my work or even my life as
well. Thanks and praise to Allah.
To my parents, they always assist me in all life aspects by encouraging me, praying for me and by
never putting obstacles in my way. I appreciate all their spent efforts in order to have an enjoyable
life. Words wouldn’t be able to reveal my love and respect towards them.
To my Coop advisor, my gratitude goes to him for his cooperation and guidance in order for me
to gain from my training as much as possible. He encouraged and is still encouraging me to have
a great training and report with challenging achievements. His fast response and feedback when I
need him are highly appreciated
To my supervisor, I think I was so lucky to be trained under his professional supervision. He have
provided all the assistance and guidance whenever I face a challenge during my training by
encouraging me to be more confident. In the other way, I have learned a lot from his work
experience or even kind personalities, he dealt with me as a regular employee, as an ambitious
trainee, and as a close friend.
Finally my regards go to everyone who ever has done a favor to me in a way or another to maximize
my benefits from that period which is actually reflected in my current personality.
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Table of Contents: Executive Summary ........................................................................................................................ 3
Acknowledgements ......................................................................................................................... 4
Table of Figures .............................................................................................................................. 6
List of Tables .................................................................................................................................. 6
Introduction ..................................................................................................................................... 7
Chapter 1: Company Background ................................................................................................... 8
1.1 Saudi Aramco ........................................................................................................................ 9
1.1.1 The Story of ARAMCO ................................................................................................. 9
1.1.2 Aramco Business Lines .................................................................................................. 9
1.1.3 Export ........................................................................................................................... 10
1.1.4 Reserves ........................................................................................................................ 10
1.1.5 Partners ......................................................................................................................... 11
1.1.6 Refineries ...................................................................................................................... 11
1.2 Organization Structure ........................................................................................................ 12
1.3 The Department ................................................................................................................... 13
Chapter 2: Job History .................................................................................................................. 15
2.1 Job History .......................................................................................................................... 16
2.2 Assigned Units and Department .......................................................................................... 17
2.2.1 Crude & Product Billing Unit ....................................................................................... 17
2.2.2 Petroleum Accounting & Reporting Unit ..................................................................... 18
2.2.3 Shipping (Shipping Unit).............................................................................................. 20
2.2.4 Payment Group (Treasury Department) ....................................................................... 26
Chapter 3: Technical Part.............................................................................................................. 30
3.1 Invoice Creation process ..................................................................................................... 32
3.2 Invoice Creation in SAP ...................................................................................................... 33
3.3 Price Calculation ................................................................................................................. 43
3.4 Problems Encountered During Issuing Invoices ................................................................. 47
Chapter4:Analysis of Co-Op Experience ...................................................................................... 49
4.1 Evaluation of Co-op Training Experience .......................................................................... 50
4.2 Learned Outcomes............................................................................................................... 50
4.3 Academic Courses Association ........................................................................................... 51
Chapter 5: Online Courses and Sessions ...................................................................................... 52
5.1 Online Courses .................................................................................................................... 53
5.2 Sessions ............................................................................................................................... 54
Chapter 6: The Oil Prices Collapse ............................................................................................... 56
6.1 The Oil Prices Collapse and its Effect on Saudi Aramco ................................................... 57
6.1.1 Vision 2030................................................................................................................... 58
6.1.2 IPO ................................................................................................................................ 59
Conclusion .................................................................................................................................... 61
References ..................................................................................................................................... 62
Appreciation letter ........................................................................................................................ 60
Appendixes ................................................................................................................................... 61
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Table of Figures: Figure 1: Saudi Aramco's Partners. ............................................................................................... 11 Figure 2: Organization Structure. ................................................................................................. 12
Figure 3: Monthly Report. ............................................................................................................ 20 Figure 4: Releasing Process. ......................................................................................................... 22 Figure 5: Safety Letter. ................................................................................................................. 24 Figure 6: Port stander massage. .................................................................................................... 25 Figure 7: Saudi Aramco pipeline .................................................................................................. 26
Figure 8: Confirmation from Treasury department. ..................................................................... 28 Figure 9: The Combinations between the units ............................................................................ 29
Figure 10: Invoice Creation in SAP, First step. ............................................................................ 33
Figure 11: Invoice Creation in SAP, Second step......................................................................... 34 Figure 12: Invoice Creation in SAP, Third step. .......................................................................... 34 Figure 13: Invoice Creation in SAP, Fourth step. ......................................................................... 35
Figure 14: Invoice Creation in SAP, Fifth step............................................................................. 35 Figure 15: Invoice Creation in SAP, Sixth step. ........................................................................... 36 Figure 16: Invoice Creation in SAP, Seventh step. ...................................................................... 37
Figure 17: Invoice Creation in SAP, Eighth step. ......................................................................... 38 Figure 18: Invoice Creation in SAP, Eighth step. ......................................................................... 38
Figure 19: Invoice Creation in SAP, Ninth step. .......................................................................... 39 Figure 20: Invoice Creation in SAP, Tenth step. .......................................................................... 39 Figure 21: Invoice Creation in SAP, Eleventh step. ..................................................................... 40
Figure 22: Invoice Creation in SAP, Twelfth step. ....................................................................... 41
Figure 23: Invoice Creation in SAP, Final step. ........................................................................... 42 Figure 24: Deferent benchmarks based on the regions. ................................................................ 43 Figure 25: Example of pricing model in excel that the unit is using. ........................................... 44
Figure 26: Price Differential. ........................................................................................................ 45 Figure 27: Discount Price, Freight. ............................................................................................... 46
Figure 28: The National Shipping Company of Saudi Arabia (Bahri). ........................................ 47 Figure 29: Oil Prices movement from 1948 to 2016. ................................................................... 57 Figure 30: Vision 2030. ................................................................................................................ 58 Figure 31: Saudi Aramco’s value. ................................................................................................ 59
List of Tables: Table 1: Saudi Aramco’s Refineries ............................................................................................. 11 Table 2: Job History Plan .............................................................................................................. 16 Table 3: Aramco’s port control center .......................................................................................... 24 Table 4: Academic Courses Association in the Workplace .......................................................... 51
Table 5: Abbreviation ................................................................................................................... 65
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Introduction:
This report shows the experience gained during the Cooperative Training Program period. It
was divided into six parts and was explained in more details later.
Cooperative Training Program (Coop) is one of the requirements for senior students in the Banking
and Finance Department at College of Business Administration. This training lasts for about four
months (16 weeks) and gives us the ability to observe, learn and apply what we have learned
previously in the university. It is about experiencing a real-life job involving tasks and assignments
of one of the finest company in Saudi Arabia.
Saudi Aramco is one of those organizations that offer excellent opportunities for trainees. It also
plays an important role in the world’s oil industry. I took my training in Saudi Aramco at the
Operation Accounting Department (OAD). OAD’s mission is to support the customers’ and the
company’s business objective is to have optimal and compliant processing and reporting of
financial transactions for hydrocarbon production and sales.
In order to accomplish this mission, they have some processes in place such as; generating financial
reports and analyses that provide the company's management and the government with timely and
accurate information required for appropriate business decisions in an emerging dynamic market.
Furthermore, maximization the revenues by exercising the company's full entitlements under
crude/RP exports' sales contracts. All of these processes were implemented under supervision of
OAD executives to achieve optimal income.
This report is divided into six main parts. The first part is a detail discusses the work place
“ARAMCO”. The second is about the job history during the 16-weeks training period. Third part
is a discussion of the technical side of my training experience. Fourth part, contain an evaluation
of the training and analyzing the Co-Op Experience. Fifth part, is a description of the Online
Courses and Sessions. The final part is about the Oil Prices Collapse followed by conclusion,
references and appendices.
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Chapter 1: Company
Background 1.1 Saudi Aramco
1.2 Organization Structure
1.3 The Department
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1.1 Saudi Aramco:
1.1.1 The Story of Aramco:
It all started in 1933, when Saudi Arabia allowed Standard Oil of California “SOCAL, now
Chevron” to come in and explore the area. SOCAL assigned the job to a subsidiary that was the
California Arabian Standard Oil Company “CASOC”. In 1936, the Texas Company (later Texaco)
bought half of that subsidiary, and in 1944, the partnership renamed itself “Aramco.”
In 1948, the predecessor companies of today’s ExxonMobil joined the partnership. This four-
company consortium made up Aramco until 1980, when the Saudi government completed a
gradual buyout of Aramco’s assets. In 1988, the successor company was established as the Saudi
Arabian Oil Company “Saudi Aramco” to recognize both its binational history and its good
reputation (Archive, Aramco world, 2015).
1.1.2 Aramco Business Lines:
Saudi Aramco is the national energy corporation of Saudi Arabia. It produces natural gas
liquids (NGL), gas and five grades of crude oil. Its various refineries and gas plants make gasoline,
naphtha, ethanol, liquefied petroleum gas and other products. It exports about three-quarters of its
crude oil, partly in its own tankers; naturally, it supplies almost all of Saudi Arabia’s domestic
energy needs as well. Its products are used to make not only gasoline, diesel fuel and heating oil,
and cooking gas, but also an enormous range of other things, from fertilizer to bicycle helmets to
car parts to the ink on this page. In crude oil, Saudi Aramco is the largest single producer in the
world: roughly one out of every 10 barrels of oil anywhere comes from Saudi Aramco.
Where the business line of the company based on the upstream part of the business involves
exploring and producing the oil. Refining, transporting and marketing the oil and its products make
up the downstream part. Crude oil and condensate reflects of 261.1 billion barrels. Aramco’s
average daily crude production is 10.2 million barrels per day (bpd), and the company have
stewardship of natural gas reserves of 297.6 trillion standard cubic feet.
Saudi Aramco subsidiaries and affiliates are located across the globe in Saudi Arabia, China,
Egypt, Japan, India, the Netherlands, the Republic of Korea, Singapore, the United Kingdom and
the United States. The Company’s employees are numbered at more than 65,266 employees,
54,666 of them are a Saudis and the other 10,600 are from more than 100 different nationality
presences through various subsidiaries and affiliates (Saudi Aramco, 2017).
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1.1.3 Export:
Saudi Aramco sends more than half of the crude oil, refined products and NGL that it produces
to the Far East. The United States receives about 16 percent of Saudi Arabia’s crude oil but less
than five percent of its refined products and about three percent of its NGL. Altogether, Saudi
Aramco ships more oil around the world than any other single company or country.
From Abqaiq or other crude-processing facilities, the oil moves to export terminals at Ras Tanura,
Ras al-Juayma or some smaller terminal. Most export oil moves through the Strait of Hormuz,
which separates Oman and Iran. This chokepoint is vitally important to world markets, given that
17 million barrels of oil flowed through the strait in 2013. More than 85% of the crude oil that
moves through this strait is destined for Asian markets. Of Saudi crude, 68% is destined for Asia,
10% for Europe, 19% for the Americas and 3% for elsewhere. By country, however, the United
States is still the top importer of Saudi liquids, estimated at 1.5mbpd.
In 2013, the next four top importers of Saudi crude and petroleum products, after the United States,
were Japan “1.2mbpd”, China “1.1mbpd”, South Korea “0.9mbpd” and India “0.8mbpd” (Saudi
Aramco, 2017).
Much of the pipeline capacity that is outside the Eastern Region has the dual purpose of serving
the Kingdom’s markets in the Western Hemisphere and acting as a back-up export route, which
would route Eastern Region oil production west to the export terminal at Yanbu on the Red Sea,
should a security problem ever close the Strait of Hormuz.
1.1.4 Reserves:
Despite producing millions of barrels of crude oil daily for decades, the amount of oil Saudi
Aramco can tap for future production—its reserves—has actually increased over time to an
estimated 260 billion barrels, the largest in the world. Two things explain this phenomenon: First,
the amount of oil it has discovered, in almost every year, has been greater than the amount it
produced in that year; second, technological advances in such areas as reservoir characterization
and drilling methods make more oil accessible that couldn’t be reached before (Saudi Aramco,
2017).
Oil isn’t the only reserve that’s important, though: Saudi Aramco also holds the world’s fourth-
largest reserves of natural gas, and they, too, grow steadily larger for the same reason.
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1.1.5 Partners:
Figure 1: Saudi Aramco's Partners.
Aramco has a Joint venture partners between Total, Shell, Repsol, Eni, Luke Oil and
SINOPEC. The extent of Saudi Aramco’s international business partnerships—joint ventures,
consortia, part ownerships and other arrangements go beyond easy summary. In Saudi Arabia, two
of the company’s seven refining operations involve international partnerships: Shell in Jubail on
the Gulf, and ExxonMobil in Yanbu on the Red Sea. Also on the Red Sea, Japan’s Sumitomo
Chemical Co has joined in a new refining and petrochemical project at Rabigh (Saudi Aramco,
2017).
1.1.6 Refineries:
Saudi Arabia has a large refinery capacity, consisting of four refineries 100% owned by
Aramco (at Jeddah, Ras Tanura, Riyadh and Yanbu); and three joint-venture refineries (the
SAMREF refinery 50% owned by ExxonMobil, the SASREF refinery 50% owned by Shell and
the Petro Rabigh refinery 62.5% owned by Sumitomo Chemical). In 2014, Yanbu Aramco Sinopec
Refining Company “YASREF” Limited, a joint venture with the Chinese Petrochemical
Corporation (Sinopec), capable of processing up to 400,000bpd of Arab heavy crude oil from
Manif, came online (Archive, Aramco world, 2015).
The main refineries, by processing capacity are:
Ras Tanura (Saudi Aramco) 550,000bpd
SATORP Jubail (Saudi Aramco, Total S.A.) 400,000bpd
Petro Rabigh (Saudi Aramco, Sumitomo Chemical) 400,000bpd
SAMREF Yanbu (Saudi Aramco, Exxon Mobil) 400,000bpd
YASREF (Saudi Aramco, Sinopec) 400,000bpd
SASREF Jubail (Saudi Aramco, Shell) 305,000bpd
Yanbu (Saudi Aramco) 250,000bpd
Riyadh (Saudi Aramco) 122,000bpd
Jeddah (Saudi Aramco) 85,000bpd
Table 1: Saudi Aramco’s Refineries
: Saudi Aramco’s Refineries
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1.2 Organization Structure:
President & CEO
Operaions & business services
Finance, strategy &
development
Treasury Cotroller's
Contract Review & Cost Compl Department
Accounting Policies & System
Department
Operation Accounting Department
Export sales & Shipping Accounting
Division
Domestic Sales
Accounting Division
Payroll Division
Payables Accounting
Division
New Business Devolebment
Corporate Planning
Technical services
Upstream Downstram Law
Figure 2: Organization Structure.
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1.3 The Department:
As the program started, I attended an orientation meeting, where the Academic Programs &
Partnerships Department distributed the Coop trainees to different departments in different
locations, where they assigned me in the Operation Accounting Department. The department has
four divisions:
• Export Sales and Shipping Accounting Division.
• Domestic Sales Accounting Division.
• Payroll division.
• Payables accounting division.
And I’m working with Export Sales division.
1.3.1 Export Sales and Shipping Accounting Division:
1.3.1.1 Vision Statement:
“To be the sought after business partner responsible for the accounting of corporate revenues and
disbursements in accordance with Saudi Aramco’s policies and guidelines.”
1.3.1.2 Mission Statement:
“To support our customers’ and the company’s business objectives through optimal and compliant
processing and reporting of financial transactions for hydrocarbon production and sales.”
1.3.1.3 Strategies:
1.3.1.3.1 Customer Focus:
• To ensure that the company receives its sales revenue correctly and timely while
maintaining good relations with its customers.
• To ensure maximization of revenues by exercising the company's full entitlements
under crude/RP exports' sales contracts.
• To generate financial reports and analyses that provide the company's management and
the government with timely and accurate information required for appropriate business
decisions in an emerging dynamic market.
1.3.1.3.2 Efficiency Focus:
• To utilize a competent workforce with knowledge of the oil industry and the systems
used, and good interpersonal skills to deal with the international customers and Saudi
Aramco's operations staff.
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• To continue to modernize the systems, simplify procedures and eliminate redundancies
for operational excellence.
• To increase productivity and improve efficiency through effective utilization and
motivation of the work force.
• To continue the review and improvement of policies and procedures to ensure adequate
internal controls.
Saudi Aramco sends more than half of the crude oil, refined products and NGL that it produces to
the Far East. The United States receives about 16 percent of Saudi Arabia’s crude oil but less than
five percent of its refined products and about three percent of its NGL. Altogether, Saudi Aramco
ships more oil around the world than any other single company or country. So now we can imagine
how important is the Export sales division are, and how its play a big role in Aramco business line.
1.3.2 The Division:
At my first day in Export Sales division, the supervisor Mr. Majed al-ahmed welcomed me
and introduced me to the division and its units.
Export Sales and Shipping Accounting Division consist of three units:
1. Shipping Unit
In Ras tanura, which is responsible to prepare, process, and dispatches shipping documents
of the vessels loading and discharging local and export gas, oil, and refined products. Also,
review, process all shipping documents requiring certification, distribution and mailing to
concerned parties within the required period of time and insert all data in the system.
2. Crude & Product Billing Unit
It is the unit that my supervisor is working in. It’s responsible for calculating crude oil,
refined product, LPG, Sulfur prices and prepares invoices to customers as well. Also
calculate the interest amounts for Jordan and Iraq. In addition, pursue excellence whilst
partnering with the company’s customers and fulfill their requests.
3. Petroleum Accounting & Reporting Unit
Which calculates the volume of crude oil, NGL, Sulfur, and refined products production
and revenue. Prepare Material Balance Report. Also, prepare all sales and inventory reports
for Ministry and SA management. PRO (revenue) and PRC (cost) monthly closing process.
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Chapter 2: Job History 2.1 Job History
2.2 Assigned Units and Department
2.3 The Combination between the Assigned Units
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2.1 Job History:
I worked with one unit during my Coop training period. The unit was in Operation Accounting
Department (OAD) which is led by Mr. Majed Al-Ahmed under Export Sales Division, while my
supervisor have planned to make a rotation for me into different divisions In order to gain more
experience and to see different scope of the work, the plan was as the following:
Months Assignments Description Period
February Introduction.
Reading and
Understanding the
Division functions.
Introduction of Saudi Aramco company and
the scope of work at OAD.
Reading and analyzing Export Sales related
procedures such as; old invoices, contracts,
agreements and bill of lading.
1 week
2 weeks
March Associated and
Engaging to Business.
Moving around the department’s division
and seating beside the co-workers to help
them in the Technical process such as; doing
the invoices and calculating the prices.
2 weeks
March – April Making the Invoices. Calculating the Price of different locations
with a different formulas, Issuing the
invoices for Saudi Aramco’s customers.
5 weeks
May Assigned to Reporting
Unit
Assigned to Shipping
Unit
Assigned to Treasury
Department.
Assigned to different groups and units to
gain more experience and to see different
scope of the work, the purpose is to
understand their functions and how it’s
related to my group.
3 weeks
Table 2: Job History Plan
: Job History Plan
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2.2 Assigned Units and Department:
2.2.1 Crude & Product Billing Unit
The unit that my supervisor is working in, and the unit that I have been working with during
my co-op period. I will explain my work in this units in details in Technical Part chapter. The
Crude Sales & Billing Unit performs the following activities:
❖ Calculates crude oil prices and prepares invoices.
❖ Maximization of revenues by exercising Saudi Aramco's full entitlement in billing our
worldwide customers as per the terms of the contractual agreements.
❖ Effective planning and efficient execution of billing.
❖ Identifying and managing the risks associated with billing process.
❖ Ensuring timely recording and collection of sales revenue due from customers.
❖ Pursue excellence whilst partnering with our clients.
❖ Calculates refined product prices and prepares invoices for refined products, LPG and sulfur.
❖ Prepare various reports related to refined product export.
2.2.1.1 The unit’s function:
Crude & Product Billing Unit preparing invoices to customers by calculating crude oil, refined
product, LPG, and Sulfur prices. To calculate prices the unit must see the deferent arrangement
that Aramco has with deferent companies based on their location such as:
• Far East
• U.S
• Mediterranean
• Northwest Europe
• Others
And also based on what type of oil they take, Aramco provide the world with different kinds of
oil. Oil types differ from each other in their viscosity, volatility, and toxicity. Viscosity refers to
an oil's resistance to flow. Volatility refers to how quickly the oil evaporates into the air. Toxicity
refers to how toxic, or poisonous, the oil is. The oil types is:
• Arab Light (Diesel, No.2 Fuel Oil, Light Crudes)
• Arab Extra light (Jet Fuels, Gasoline)
• Arab Medium (Most Crude Oils)
• Arab Heavy (Heavy Crude Oils, No. 6 Fuel Oil, Bunker)
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2.2.2 Petroleum Accounting & Reporting Unit: The Petroleum Accounting Unit performs the following activities:
❖ Calculates the volume of crude oil, NGL, Sulfur, and refined products production.
❖ Calculates and books the production costs of crude oil, NGL, Sulfur, and refined products.
❖ Calculates refinery and NGL crude charges, yields, and stocks; monitors refinery chemical
stock.
❖ Prepare Material Balance Report and Analyze Refinery Gain/Loss.
❖ Records sales of NGL, sulfur, and refined products to export markets.
❖ Calculates and record royalties, and provides revenue information to the Government.
❖ Prepares weekly, monthly, and annual reports of crude sales volumes, prices, and revenue
for the Ministry of Petroleum and Saudi Aramco Management.
❖ Prepares various ad hoc reports relating to crude oil deliveries and inventory.
❖ Tracking and Reconciliation of In-kingdom and out of Kingdom Crude Inventory.
❖ Accounting Instruction Manuals.
❖ PRO (Revenue) Closing Process.
❖ Update Customer Master Data for Export sales.
❖ Review the daily global view prices.
2.2.2.1 The unit’s function
They also do an Accrual invoices: At the end of each month the Reporting Units need to record
the expenses for all goods or services that Aramco received during the month. Additionally,
recording all the income for goods or services that Aramco provided during the month. If there is
an invoices that did not closed from the Billing units due to cost issue, unpaid invoice or
outstanding income; the Reporting Units will process a journal voucher to record an accrual to
close the invoices.
And before the unit makes any report they must calculate the company’s production that is based
on this formula:
Production = Sales Change in Inventory
Where the inventory in this formula is including In the Kingdom inventory (IK) and Out of the
Kingdom inventory (OOK). The Out of the kingdom inventory is including the inventories that
are in the countries and the inventories that are in Ex-ships, and it’s calculated by:
OOK= Opening + Delivery - Sales Gain/Loss.
After calculating the company’s production the Reporting Units is making these deferent reports:
• Daily Reports: Reporting for all the productions and inventories on a daily basis.
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• Weekly Reports: Reporting for all the productions and inventories on a weekly basis
• Monthly Reports: Reporting for all the productions and inventories on a monthly basis
• Monthly Restrictive Reports: Is one of primary reports that is so important for the unit and
for the company as a whole. It contains the crude oil and the refined products information;
through the production, sale, inventory and daily transfer of LPG.
This report includes all the products that have been purchased and imported, whether it’s
comes from a local or an international companies. Also the exported crude oil by markets
and by pricing benchmarks.
The unit is sending this Monthly Restrictive Report to the government (Ministry of Energy,
Industry and Mineral Resources) to inform them with the details. Also the unit is putting
this report to the shared document in the local network “intranet” of Saudi Aramco, so
other departments can see it and take the productions and inventories details from it.
Especially the Saudi Aramco’s Oil Supply Planning and Scheduling (OSPAS) Department,
where they need to track the shipment using its ticket that provided by the Reporting Unit.
This report can be reviewed by the managers and all the high position persons in the
company.
• Treasury Forecast Reports: This report is aimed to the treasury department, to provide them
with the information that is in the Monthly Restrictive Report with more details to clarify
each number. It helps the treasury department to forecast the next month production.
• OPEC & JODI Reports: this report is aimed to OPEC and JODI organizations, it includes
the Monthly Restrictive Report with more details and JV’S progress report. The unit are
sending this report to the government that where the report will reviewed and send it to the
organizations.
• Final Lifting Reports: A Report that reported in a monthly basis, where it’s focus for the
final lifting of the product. The report include the Monthly Restrictive Report information
with more statistical data.
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2.2.3 Shipping (Shipping Unit):
Once the petroleum has been found, it removed from the ground, processed and refined, it
must be sent to its final destination to consumers all around the world. And before the due date
with 5 days the customer can get the shipment by the average monthly price if all costs is available.
A good rule of thumb for oil tankers is: the bigger the better. Yes, smaller ship will always be
needed to navigate shallow harbors and small ports. But in general, it cost much less to build and
operate one large, heavy ship than two smaller, lighter ones. In addition, to navigate rough seas
(like those off the Cape of Good Hope at Africa’s southern tip), a ship must be large and heavy, or
it will be swamped by the high waves.
Oil tankers are classed primarily by their weight. The largest called Ultra-Large Crude Carriers
(ULCCs), which are 300,000 metric tons or more, and Very Large Crude Carriers (VLCCs), which
range from 160,000 metric tons to nearly 300,000 metric tons. These enormous ships can range in
length from 200 metric (656 feet) to more than 400 metric (1,312 feet) as long as four or five
soccer fields placed end-to-end.
Saudi Aramco ships about 3 million barrels of crude oil and half a million barrels of refined product
every day, and all of it travels abroad huge tankers.
Aramco’s harbor pilot must know much more than just how to park a very large ship in small
space, however. They must understand the seabed, area geography, ocean tides, weather conditions
and the ships themselves. To keep the skills sharp and stay current with rapidly changing
technology, the company sends their harbor pilot to various training courses and assignments
outside the kingdom.
Figure 3: Monthly Report.
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Every vessel must have a Saudi shipping agent before entering Saudi Arabian territorial waters.
Vessels calling at any Saudi Aramco port or Terminal should address all massages concerning
ship’s business to their agent. The vessel’s agent handles matters concerning provision supply,
minor repairs, local medical, or hospital services, mail, crew changes, etc. (Fanack Energy,
2017).
2.2.3.1 Shipping Unit:
Ras Tanura Yanbu
There are a lot of vessels going around the world carrying crude oil and products from one
place to another. As a result, shipping unit is a place which calculations and documentations can
be done. Shipping Accounting responsible to ensure that all process complies with Saudi Aramco
rules and all reports are presented fairly as per off-takers requests.
In the Shipping Unit performs the following activities:
❖ Coordinates with COS&MD and OSPAS Departments to calculate the consignments (Gas,
Oil, & Refined Products) of vessels.
❖ Prepares, process, and dispatches shipping documents of the vessels loading and
discharging local and export gas, oil, and refined products.
❖ Calculates and updates Crude & Liquid Hydrocarbon Transfers Deliveries through
Pipeline.
❖ Releases ships for sailing.
❖ Processes customer documents " Oil Declaration Oil export declaration"
❖ Processes Ministry of Commerce documents " Certificate of Origin"
❖ Calculates and Processes Tug Boats services to ships calling at Jeddah.
❖ Prepares weekly and monthly reports.
❖ Coordinate with OSPAS, COS&MD, offtakers, ships’ Masters and shipping Agents - in
resolving cargo nomination quires.
❖ Review, process all shipping documents requiring certification, distribution and mailing to
concerned parties within the required period of time. In-charge in the
safekeeping/retrieving of all old documents deposited in Dhahran Records Center.
2.2.3.1 The unit’s functions:
Documentation Particulars: It is a documentation instructions which receive from sales &
marketing department which contains all the nomination details. however, some off takers have
standard destinations such as (VELLA & BAHRI) vessels.
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Berthing and securing: In this stage once vessel arrives, and no problems so far occurred vessel
can be secured. When ship is secured OSPAS will update the events time in SAP and terminal will
inform the unit once vessel secures. therefore, It is a good time for the unit to open a new file for
a new ship loading or discharging quantity.
loading or discharging period: it is a time for ships to be ready to load or discharge requested
quantities. Also, there are some important procedures while pumping crude oil or products in order
to keep quantity within the requested tolerance.
• OSPAS will update the events time in SAP.
• Terminal will inform the shipping unit once vessel secured.
• Maintaining the arrival and berthing date & time in SAP.
• Checking the details on the arrival report (Received by agent) such as quantity, master
name, vessel name, EDP ( Early Departure Process) or not EDP and ship flag.
Finished Loading or Discharging (Releasing): It is a final step for all vessels to sail after being
loading or discharging less or more one day at berth. After the ship finishes the unit receive Ullage
by e-mail or fax.
PRINT DOCUMENTS: Print out the required documents such as: Bill of lading, Certificate of
origin and Airmail cover letter.
PUBLISHING: After finalizing cargo documents, reviewing the figures as well other related
documents for instance, Lab Report and offshore documents by shift supervisor. The unit can
publish the cargo documents by scanning the pilot documents only whereas other documents
already generated by the SAP System.The publishing with below original documents in SAP:
• Ship Ullage
• Certificate of Quality
• Receipt of cargo Sample
Figure 4: Releasing Process.
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The agent will sign the Bill of lading and the inspector will check the calculations. For discharging
vessels, After receiving closing API will be published and no documents will be attached.
2.2.3.2 Safety:
Saudi Aramco requires that vessels comply with all relevant safety requirements as specified
in latest edition of (International Safety Guide for Oil Tankers and Terminal) “ ISGOTT” and all
other international regulation, guidelines and standers.
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2.2.3.3 Aramco’s port control center:
Port Reported to
Ras Tanura Ras Tanura Port Control Center
Jiddah Saudi Aramco Port Control Center
Figure 5: Safety Letter.
Table 3: Aramco’s port control center
: Aramco’s port control center
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Duba Saudi Aramco Marine
Jizan Saudi Aramco Marine
Vessels calling at any Saudi Aramco’s port or terminal should inform “Port Control Centers”
the standard message that receives from the master by e-mail. It contains of details such as agent,
quantity, vessel name, destination and vessel flag. These details should be internalized in SAP
system:
2.2.3.4 JV’S Shipment process:
The first customer for Aramco is the joints ventures such as SATORP Jubail, Petro Rabigh,
SAMREF Yanbu, YASREF and SASREF Jubail. Transported by the pipeline, Aramco completed
the East–West NGL Pipeline, which ran nearly the same distance from the Eastern Province to the
Figure 6: Port stander massage.
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Red Sea, fueling the transformation of Yanbu from a fishing town to an industrial city that is
attracting a new generation of settlers. These JV’s have deferent arrangements, like the due date it
is longer period than the other companies. The oil shipment can transported to them faster than
others “by pipeline” (Archive, Aramco world, 2015).
The shipping unit process for Pipeline Transportation:
• OSPAS create the nomination.
• Shipping Unit receiving the ticket manually, fax or by Email from Aramco operation or
government gauger.
• Entering it to the SAP in the same day that Shipping Unit receive it.
• To close: printing loading report & sending it to government gauger.
2.2.4 Payment Group (Treasury Service Department):
Cash Management and Investment Division, where it’s composed of two groups: The Cash
Management Group and the Investment Group (Dealing Room).
2.2.4.1 The cash Management Group has five main functions:
Figure 7: Saudi Aramco pipeline
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• Receiving all hydrocarbon revenues-both crude and product sales.
• Monitoring and funding all corporate Subsidiaries & SRTP accounts (Secure Real-
Time Transport Protocol).
• Making sure that cash is available at all time to meet Company’s wide obligations.
• Managing the short term cash forecast and identifying surplus funds.
• Preparing and presenting cash positions and liquidity forecasts to management.
2.2.4.2 The Investment Group (Dealing Room) has six main functions:
• Investing Corporate, Subsidiaries and SRTP’s surplus funds using approved investment
instruments as per the Board approved “Short Term Investment Guidelines”.
• Purchasing bonds and Sukuk for longer maturities on behalf of SRTP/SAIMCO.
• Buying foreign currencies spot and forward.
• Monitoring global economic conditions/financial markets and evaluating alternative
investments for various portfolios.
• Presenting investment recommendations to the Treasurer.
• Reporting investment performance & compliance to the EXCOM.
Saudi Aramco encourages costumers to utilize the Customer Portal Finance Data tap, which
enables customers to know their payment status, zakat and GOSI validity. Also the payment
process is done through an automated system.
The costumers can search for payment in the portal by the following searching keys:
• Purchase Order.
• Contact No. / Outline Agreement No.
• Duration.
The Treasury Department does not accept the data that is written in the invoice. Costumers are
required to submit the following bank data on the company’s original office letterhead signed by
an authorized person and authenticated by their bank to Operation Accounting Department:
• Costumer number.
• Telephone number.
• Business email address.
• Fax number.
• Bank Name.
• Account number.
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• Account Currency.
• SWIFT or routing number (for out of the kingdom banks only).
• IBAN number.
After the payment is received from the customers, the Cash Management and Investment Division
will inform the Crude & Product Billing Unit that the payment of this costumer is done (As the
following confirmation) so that the Billing unit can finalize the invoices.
2.3 The Combination between the Assigned units:
Saudi Aramco has a deferent business cycles, such as:
Requisition to Pay (R2P) where it is the process begins with demand from and within Saudi
Aramco for goods or services. This followed by Requisition and purchase order, the process will
complete upon goods receipt and completion of Payment.
Hire to Retire (H2R) the H2R process includes all aspect of human capital utilization, from
recruitment through Compensation, Devolvement and Retirement.
Figure 8: Confirmation from Treasury department.
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Build to Dispose (B2D) the process of measuring, recording and reporting capital development
and utilization from Project to Assets to Disposal.
Record to Report (R2R) where the process begins with individual system record through the
monthly reporting cycles, this record to report process concludes with Periodic Reporting.
Plan to Result (P2R) the process of planning including single business plan, 3 year business plan
and automated monthly MIS/Accountability.
Order to Cash (O2C) this is a multi-step Order-To-Cash process originates with a customer Order
and terminates once the customer pays for the goods or services received and the company receives
the Cash.
Where the link between the units that I have been worked with during my co-op in Saudi Aramco
(Shipping unit, Reporting unit, Billing unit and Treasury Dep) comes in Order to Cash business
cycle. And the link is as the following:
Order – Nomination
(OSPAS Dep.)
Tickets – Quantity
(Shipping unit)
Invoicing – Received
(Billing unit)
Cash Received
(Treasury Dep.)
Reporting - Revenue
and Cost closing
(Reporting unit)
Figure 9: The Combinations between the units
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Chapter 3: Technical Part 3.1 Invoice Creation process
3.2 Invoice Creation in SAP
3.3 Price Calculation
3.4 Problems Encountered during issuing invoices
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This part of my report explains the work being done through the Coop period. Export Sales
Division has three different units (shipping unit, reporting unit and billing unit)) each of which is
delegated some authorities and responsibilities in order to achieve the department's goal which is;
to support the corporate's business objectives through optimal processing and reporting of financial
transactions for hydrocarbon production, sales and purchases, as well as employee and vendor
disbursements in accordance with Saudi Aramco's policies and guidelines.
Aramco uses different types of Invoices each type has different process which requires different
invoicing procedures. In addition there are differences in prices for different locations, based on
the agreement with the customers. During the Coop period I helped my co-worker to do invoices.
First, we put the company number in SAP system to find out any invoice that we can make, the
system shows all the invoices that we can issue during this period for a certain customer. After
that, we select one invoice and displayed it to see all the information, calculating the price using
excel finance model. Then, compare the price that in SAP system with the price that we calculated
and check if there is any deferent.
After that, we make the invoice in SAP and displayed it to review all the information such as;
location, price, quantity, due date and shipment date. After we make the invoice we send it with
the attachment (the price from excel model) to the supervisor, and there he will check it with the
attachment before he send it to the manager for the approval.
After I understand the process of doing the invoices, and after helping the co-workers to make
some invoices; the co-workers start to give me their SAP access and asked me to make the invoices.
And I was making three to four invoices as a daily basis for different type of invoices. After
sending the invoices to the supervisor, I asked him to see the invoices and review it if there is any
wrong or misrepresented information.
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3.1 Invoice Creation process:
• Receive the contract, agreement, Bill of lading and the differential (from Crude Oil
Marketing & Sales Department).
• Calculating the price.
• Put the information in the SAP system.
• Check the due date, price, name, quantities and the important invoice information.
• Make the invoice by automated processing in SAP system.
• Send the invoice with the attachment to the supervisor. (The attachment is: excel sheet that
used to calculate the price, the freight and other document that is related to the invoice).
• Ones the invoice is verified or reviewed by the supervisor, managers receives a work item
in his SAP inbox. And after reviewed it the invoice will be approved.
• Wait tell due date to hear from treasury department if the customer did the payment or not,
to finalize the invoice it they paid. And if they did not, the units will charge them for the
late payment to settle the invoice.
3.1.1 Type of invoices:
There is three type of invoices that the Crude & Product Billing Unit are creating:
❖ Final invoices: If all the costs of the month is available, the units will create a final invoice.
❖ Provisional invoices: If the all costs is not available, the units will create a provision
invoice, and after the costs will be available the unit will settle the invoice to finalize it.
❖ Demurrage/ claims: If the costumers or the buyer did not do the payment in the due date,
the units will charge them and create the demurrage to settle the invoice.
Usually the units makes the invoices by automated system, but manual invoices may be required
where automatic invoicing has not been granted, or where the nature of the order items requires a
manual invoice, such as for progress payment.
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3.2 Invoice Creation in SAP:
• First, intering Transaction ZE0032 – Custom Billing Due List
• Putting the number of the customer, then DisplayBillList to display all the invoices that
due to the certain customer.
Figure 10: Invoice Creation in SAP, First step.
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• Checking if total quantity delivered in SAP is equal to the total quantity delivered in the
Production report received from Reporting Unit.
Figure 11: Invoice Creation in SAP, Second step.
Figure 12: Invoice Creation in SAP, Third step.
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• Doing the calculation using the Pricing Model Excel Sheet.
• Matching the total amount in PM with the invoice Net Value in SAP.
Figure 13: Invoice Creation in SAP, Fourth step.
Figure 14: Invoice Creation in SAP, Fifth step.
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• Checking if SAP has calculated the invoice Due Date correctly.
Figure 15: Invoice Creation in SAP, Sixth step.
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• Then clicking on save button. Create Work Flow? Yes
Figure 16: Invoice Creation in SAP, Seventh step.
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• Open SAP Business Workplace, then open the invoice in SAP inbox.
Figure 17: Invoice Creation in SAP, Eighth step.
Figure 18: Invoice Creation in SAP, Eighth step.
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• Display the invoice.
• Attaching Pricing Model, Differentials, Freight and Production Report.
Figure 19: Invoice Creation in SAP, Ninth step.
Figure 20: Invoice Creation in SAP, Tenth step.
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Figure 21: Invoice Creation in SAP, Eleventh step.
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• Print the invoice then Submit.
Figure 22: Invoice Creation in SAP, Twelfth step.
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• After that, the invoice will saved and will be send with the attachment to the supervisor
inbox in SAP, and this is how the invoice final looks:
3.2.1 What invoice contains:
• Invoice number.
• Invoice issue date.
• Payment due date.
• The location of delivery from where and to where.
• Delivery date.
• Delivery type.
• Discerption.
• Quantity.
• Price.
• Type of payment.
• Detailed of bank account.
• Signature of the manager for the approval.
Figure 23: Invoice Creation in SAP, Final step.
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3.3 Price Calculation:
Saudi Aramco calculating the price of oil based on price benchmarks such as:
ASCI “Argus Sour Crude Index” for the shipment to the United State.
ICE Brent for shipment to the euro.
Dubai and Oman for the shipment of Asia.
3.3.1 The pricing process:
• The Crude & Product Billing Unit take the cost from the first day of each month through
the first business day prior the last business day of trading on markets (ASCI, ICE and
DUBAI) traded in the scheduled month of delivery.
• In the beginning of each month the unit start to make the invoices, where the cost of the
earlier month is available.
Figure 24: Deferent benchmarks based on the regions.
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• Calculating the average price of the month. Not all of the companies take the average price,
each one have its agreement with Aramco. But in general Saudi Aramco take the average
price of the month.
• Considering the differential”- or +” for each month, that is the adjustment for the price.
• Perceive the freight or discounted price based on the companies agreements.
• Each company have a pricing formula that is also based on the company agreement. The
agreements can be deferent in due date, costs, locations, delivery date...etc.
Price = Formula price Differential – Freight
Total amount = Price * Quantity of barrels
• Calculating the prices using excel model sheet for each company or regions.
3.3.2 Price Differential:
Figure 25: Example of pricing model in excel that the unit is using.
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The term price differential is used to describe the practice of charging different prices to
different buyers for the same quality and quantity of a product, but it can also refer to a combination
of price differentiation and product differentiation. It is a pricing strategy where identical or
largely similar goods or services are transacted at different prices by the same provider in different
markets. Price differentiation is distinguished from product differentiation by the more substantial
difference in production cost for the differently priced products involved in the latter strategy. The
Marketing & Sales departments are providing the Export Sales unit the price differential for each
month, which is helping the unit for the adjustment in the price when they makes the invoices.
3.3.3 Discount Price (Freight):
Saudi Aramco have deferent agreements and contracts for each company. The Aramco’s Joint
Ventures is receiving a deferent arrangement compare it with others; such as a discounted price
Figure 26: Price Differential.
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and a longer due date for payment. Like the joint ventures, the regions that the demand of Aramco’s
oil is less than before (U.S and EURO) is having a discounted price. The company want to establish
a competitive advantage for making this strategy. Any Saudi ship contributing to the Saudi
Economy shall get a thirty percent (30%) discount from RT posted international price provided
that it is originating from a or destined to a Saudi port
3.3.4 Competitive advantage:
Aramco gives special price or a discounted price for the U.S and euro region to compete the
competitor especially when nowadays the demand is lower than before for these places. Also
Aramco provides services to grab customers in these region such as delivering ex ship which is a
big vessel to them and make it stop in the sea so that the buyers can get the oil easily, faster and
with no risk. The passing of risk does not occur until the ship has arrived at the named port of
destination and the goods made available for unloading to the buyer. Aramco pays the same freight
and insurance costs as it would under a CIF arrangement. Unlike CFR and CIF terms, Aramco has
agreed to bear not just cost, but also Risk and Title up to the arrival of the vessel at the named port.
Figure 27: Discount Price, Freight.
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3.4 Problems Encountered During Issuing Invoices:
➢ During the process of making and issuing the invoices, I had an issue with one customer
that the price in SAP system is not matching the price that I calculated in excel; so the co-
worker told me to adjust the formula in excel to fixed this issue, and I adjusted based on
the new change in the agreement for this customer contract with Aramco. After adjusting
the price, the amount was the same in the SAP and excel.
After that my supervisor asked me to prepare a list of Asian customers and collected it
from the Co-Workers, specified which ones is affected from the latest agreements. Then,
he want to send a letter to the Marketing & Sales department to inform them with the
customers that were affected. And I did the list and send it to them as an E-mail with
explanations to the issue and the information that they need.
➢ One customer did not paid in due date so we had to charge that customer for the delay
payment, so we made a settlement invoice. We calculate the prices for the days that they
delayed, and adding the last amount of the invoice. Settlement invoice is an invoice for a
delay payment invoice, if a customer did not pay in the due date the unit will charge them
for the delay payment. After the invoices have made, the unit are keeping a copy of the
invoices and wait tell due date, the treasury department will inform the unit if the customer
have paid the amount or not.
Figure 28: The National Shipping Company of Saudi Arabia (Bahri).
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➢ There was a new customer with a special agreement, and only one of the employees know
how to make that kind of invoices. So I helped the other colleagues by making a desk
procedure, which is the procedure of the invoices that define the steps of making the
invoices in SAP system. The purpose of this desk procedure; is to help the new employees
to understand the process of making the invoices. Also to make them follow each steps
correctly without making any mistake or error in SAP system.
Furthermore, I prepare it with briefly explaining of each step, with a screen shoot in SAP
system to make it easy to follow the steps. After I prepare the desk procedure, I put it in
shared folders in Aramco intranet so that everyone in the department can see it.
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Chapter4:Analysis of COOP
Experience 4.1 Evaluation of COOP Training Experience
4.2 Learning Outcomes
4.3 Academic Courses Association
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This section is an evaluation to assess the cooperative work period spent with Saudi Aramco in
general, and what I have learned during that period.
4.1 Evaluation of COOP Training Experience:
It was an excellent experience opportunity for me especially when I saw the practical side of
what I have learned during my study in the university as a theoretical side. I practiced some
important activities that are related to my major.
I also had an opportunity to experience a real job period in a professional environment which has
returned many beneficial skills, including communication, disciplinary, responsibility and
accountability skills.
The professional environment has taught me how real work is done and tasks are accomplished.
Dealing with people was needs critical skills because of the differences in level and knowledge
amongst all. Saudi Aramco is a big company with a verity of people that taught me how to
understand others’ culture and communicate with all.
4.2 Learned Outcomes:
Here are some lessons I have learned during the training period, and I am sure that I have learned
more than that:
✓ Understanding the process of Operation Accountant Department and all its divisions.
✓ Understanding how oil businesses are traded around the world.
✓ Understanding how the shipments are delivered.
✓ Understanding the invoices that created in Crude & Product Billing Unit.
✓ Understanding how the Petroleum Accounting & Reporting Unit work and the types of
reports that they prepare.
✓ Understanding how Investment Department conducting a deal with banks.
✓ I became exposed to many functions and models of MS Excel program.
✓ I learned how to write a business/ professional e-mail.
✓ I learned how to manage my time and be commitment in the work place from 7.a.m, and
be there till 4.p.m
✓ I learned how to deal and interact in a diver’s environment.
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4.3 Academic Courses Association:
Academic Course How its Benefit my experience in the Workplace
Financial Management How to calculate the price.
Computer Applications in
Finance How to make Finance models in Excel through the formulas.
International Finance How businesses are traded around the world.
Organization Behaviour How to deal with Organization Diversity.
Business Communication Workplace Manners, Official Letters. Business Emails,
CV,,,Etc.
Contemporary Issues in
Finance The knowledge of Recent issues in the industry “Oil price”.
Table 4: Academic Courses Association in the Workplace
: Academic Courses Association in the Workplace
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Chapter 5: Online Courses
and Sessions 5.1 Online Courses
5.2 Sessions
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5.1 Online Courses:
Online learning, or E-learning, provides many advantages and benefits for employee who
looks to learn about new technology or guidelines of safety in the Company. All of Courses that I
take were either required from Operation Accounting Department (SAP Development Courses) to
provide ability to do tasks in Crude & Product Billing Unit or either from Saudi Aramco in general
(Safety Courses) because Safety is considering to be first value in Saudi Aramco Company.
✓ SAP Basic Skills: This course provides an overview of the Aramco SAP System. It is
designed to provide Saudi Aramco end-users with the basic skills required to effectively
navigate the SAP R/3 system and this course helped me in the task that I did it in this four
month.
✓ Phishing Email: Because Cyber Security is considered as an urgent aspect in Saudi Aramco
in regard to avoid the company from any harm, IT now sends Phishing emails which
indicates the behavior of each one of the employees to see how would they response to
these spams emails.
✓ Information Security Essentials: This course is to ensure that all users of Saudi Aramco’s
computer resources understand the Computer Acceptable Use policy, and to understand
their role and responsibility towards the use of Information Assets. To guide users to
maintain confidentiality, integrity and availability of the organization’s information assets.
And to promote an information security corporate culture.
✓ Finance Modules: This course helped me to determine the data required to complete
Financial Accounting transactions that meet the unit business need. Align business
processes with the Financial Accounting module and controlling module.
✓ Billing: The purpose of this course is to cover all aspects of the system after the delivery
process is complete. This course focuses on the creation and sending of bills to customers.
Custom built billing due lists are used for this purpose.
✓ Safety Handbook: This Course describes minimum safety procedures relevant to office
safety. It is the same information contained in the safety Handbook.
✓ Fire Safety Awareness: prepares students to use portable fire extinguishers, recognize fire
hazards, and take appropriate action in the event of the fire.
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✓ Injury Reporting and investigation: Describe Injury Reporting and Investigation
Procedures.
5.2 Sessions:
Sessions are very important part in every Organization environment that is why Saudi Aramco
Company focused on an invitation to attend the COOP students. Sessions Allow employees to
share ideas, gain experiences from expert people, learning new technology, change from usual
routine. As I attended, I was exposed to different related discussion, and I took notes highlighting
the things that I’ve learned. So the meetings that I’ve attended are as follow;
✓ Business line orientation: Finance, Strategy and Development (FSD) did a business line
orientation. It was a meeting for all COOP students in the department that was an initiative
sponsored by FSD Human Resource Development center.
The objective of the orientation is to provide us with a brief about Saudi Aramco in general,
and about FSD in specific. In addition, they emphasized on the importance of certificates
in the finance industry and how it is encouraged by Saudi Aramco. Service Line consists
of several key Admin Areas including Controller’s, Treasury, New Business Development,
Corporate Planning, Planning Budgeting and Performance Management Center. Moreover,
my department (Operation Accountant Department) is one of the Controller.
✓ Dealing room visit: the Investment Department did a dealing room visit for the COOP
students, which is part of cash management function where they invest cash for short term
as Depo & Repo. It is interesting just to see the technology used and get exposed to the
process of conducting the deal.
First, they introduce us to Investment Department and how they work. Then they explained
these terms and how they are using it: SIBOR, LOAN TO DEPOSIT, NET OFF and
LIBOR. After the department explained to us these terms, they showed us the dealing room.
The Investment Department are managing the deposit and FX on that room, using Reuter’s
system for deposit and Bloomberg’s system for FX. Then they showed us how they make
a deal & conversation with banks using Reuters.
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✓ Tax Management Unit meeting: there was a meeting in Tax Management Unit, at Payroll
division and my supervisor has invited me to attend the meeting. The unit are providing
personal income tax services to eligible employees, accounting responsibly for monthly
U.S. tax payments to the Department of Treasury, U.S.A.
The meeting was with PwC Company that is the second largest professional services firm
in the world, and one of the Big Four auditors. The PwC Company is Securing,
administering, and overseeing Aramco’s contracted employee tax assistance services, In-
Kingdom (IK), and Out-Of-Kingdom (OOK). The meeting was aimed to discuss the
projects that are in progress, and the issues that the units have faced during this period.
✓ Safety communication meeting: A meeting for all Operation Accounting department that
discuses general safety rules, office safety rules, driving safety rules, fire protection rules
and emergency actions. Security in Every Department in Saudi Aramco is very important
to protect each System that has critical data from detection, also to give confidentiality to
all users that deal with Saudi Aramco. For example, names of Companies that Aramco deal
with in vessel hiring, information of employees and so on.
One of OAD behavioral safety standers is Safety Management System Manual (SMS),
which is a tool to manage safety within the department, ensures the compliance with Saudi
Aramco SMS. Also helps to reduce and prevent on-the-job and off-the-job incidence of
injuries for OAD personnel, as well as protects the company assets and achieves OAD
Safety Vision "To create a workface committed to safety at work, on the road and at home".
✓ Communication meetings: Communication meetings are informal weekly gathering, where
the whole department; manager, head of divisions, teams set together in the morning for
approximately 45 minutes to discuss different issues and share different topics and matters.
It’s a break for the routine as well as a way of bounding employees together.
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Chapter 6: The Oil Prices
Collapse 6.1 The oil prices collapse and its effect on Saudi Aramco:
• Vision 2030
• IPO
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6.1 The Oil Prices Collapse and its Effect on Saudi Aramco:
Saudi Arabia’s 2014 decision to defend oil market share in the face of rising non-conventional
output like US shale, Canadian tar sands and Brazilian ultra-deep water fields helped push oil from
more than $100 a barrel to less than $30.
For Export sales division, and after the decreasing of the prices; the demand of Aramco’s oil has
become low because of the high companion in the market. That lead to the lower number of
invoices that comes out of the division compare it with three years ago when the oil prices is above
$100 and the demand is high.
On the other hand, Aramco has its joint venture and new projects to achieve the objective of
sustainable demand for Aramco’s oil. Such as Aramco's Malaysia deal that is the latest project
that gives Aramco an upper hand in fight for Asia oil share. RAPID project secures long-term
outlet for Saudi crude, Expects refined oil products markets to balance by mid-2018.
Saudi Aramco is the top global oil exporter, and it’s broke from the pack in the race to lock up
Asian market share after agreeing to pump $7 billion into a refinery-petrochemical complex in
Malaysia. Under the deal with Malaysia's Petroliam Nasional Bhd “Petronas”, Aramco will supply
up to 70 percent of the crude for RAPID, which will consist of a 300,000 barrel per day (bpd) oil
refinery and petrochemical plants (Raval, Hume and Sheppard, 2017).
Aramco also investing in energy market and starting new projects to divers the income. Saudi
Aramco is looking to secure more customers by establishing refining joint ventures in countries
were demand is still growing, Mr. Nasser said, pointing to plans for the US, China, Indonesia and
Vietnam as it prepares for the stock market listing.
The Result of Oil Price Declines:
Figure 29: Oil Prices movement from 1948 to 2016.
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6.1.1 Vision 2030:
The Kingdom’s Vision 2030 and 2020 National Transformation Program took center stage the
Saudi economy. Deputy Crown Prince and Minister of Defense Muhammad Ibn Salman ibn
Abdulaziz Al Saud, recently unveiled the progressive economic road map for the Kingdom’s
economic development, with diversification of the economic landscape away from over-reliance
on oil. The diversification of the Saudi economy away from oil is viewed as a key national
objective for sustainable economic development.
Crown Prince was accompanied by senior ministers, including HE Khalid A. Al-Falih, Minister
of Energy, Industry and Mineral Resources, and Chairman of the Saudi Aramco Board of
Directors; that took part in disseminating the message, also taking time to share Saudi Aramco’s
strategy to help implement Vision 2030. Al-Falih noted that Saudi Aramco will take center stage
in helping to implement this vision. The company’s assignment to assist in the effort can be
attributed to its history of excellence.
The plan aims to end the country’s dependency on oil within 13 years, leveraging the assets of the
state oil company to fund wide-ranging investments to diversify its economy. Saudi Arabia’s new
oil minister Khalid al-Falih, former CEO and current chairman of Aramco, spoke of “stability” in
the kingdom’s oil policy on his first day of the job, but he also indicated a willingness to use the
country’s “maximum sustainable capacity” to meet customer demand.
Petrochemical sector and Saudi Aramco’s continued growth of its downstream business have the
potential to play a pivotal role in the Kingdom’s 2030 Vision for a diversified and sustainable
economic future, according to Saudi Aramco’s vice president of Chemicals.
It is therefore not surprising that the petrochemicals sector was highlighted as an important vehicle
for implementing the National Transformation Vision. The sector will play an increasingly
important role in the future (Vision2030, 2017).
Figure 30: Vision 2030.
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“Saudi Aramco still sees opportunities and is utilizing this down cycle to grow its business,
especially in the downstream sector and in gas, where we are expanding quickly,” Mr. Ameen AL-
Nasser, CEO of Saudi Aramco.
6.1.2 IPO:
Saudi Arabia, is under pressure after lower crude prices, the government wants to sell shares
in Aramco in early 2018 as part of an effort to generate revenue and reform its economy. Saudi
Arabia hopes to raise about $100 billion from the Initial Public Offering “IPO” of its flagship asset.
The planned sale, which Deputy Crown Prince Mohammed bin Salman announced, could be the
world’s largest share offering.
For months Saudi Aramco has invited banks to its headquarters in Dhahran to pitch for advisory
and underwriter roles on the IPO, in which the world’s largest oil producer could sell a 5 per cent
stake to investors.
The national oil company of Saudi Arabia, is expected to have a $2 trillion value; which is more
valuable that ExxonMobil, Apple or Alibaba. Aramco named J.P. Morgan, Morgan Stanley and
HSBC as the underwriters for its offering (Mahdi, 2017).
“Transparency is something that we are looking forward to,” Mr. Nasser said of the IPO. “Our cost
per barrel is the lowest in the industry. If we get to IPO stage we will look to do this share data
quarterly.”
Figure 31: Saudi Aramco’s value.
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Initially, the IPO was expected to take place in early 2018, but the expected date has since been
pushed off to late 2018 or early 2019. This is likely due to Aramco’s desire to complete the
financial restructuring process to make the company more attractive to investors.
Investors will be looking most closely at a set date for the IPO. Markets expect Aramco, through
Saudi Arabia and OPEC, will seek to increase the price of oil before the IPO to increase the
proceeds from the IPO. This is because Saudi Arabia is the single most powerful country in OPEC.
The Malaysian deal should bolster Aramco's IPO, which Saudi officials have predicted will value
the company at a minimum of $2 trillion through the sale of 5 percent stake. Investment into
Malaysia's RAPID project will secure an outlet for its crude oil for at least two decades, and beefs
up its downstream portfolio ahead of its initial public offering “IPO” next year (Mahdi, 2017).
Saudi Aramco is making a critical contribution to the diversification and growth of the Saudi
economy in line with Saudi Vision 2030. A Royal Order comes in March, 2017 for new tax regime
for all hydrocarbon producers operating in the Kingdom as another positive step in the
diversification of the Kingdom’s economy. The Royal Order announcing the reduction of Saudi
Aramco's tax rate to 50 percent from 85 percent, and this new tax rate will bring Saudi Aramco in
line with international benchmarks, it will make Aramco more appealing to international investors
in preparation for its promised initial public offering (Raval, Hume and Sheppard, 2017).
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Conclusion:
In this four-months training period, I experienced a lot of useful things starting from online
courses to participate tasks with my group, whether they are related to my major or not. I
experienced a real job period under professional environment. Many ideas were implemented and
skills have been used throughout that period. I had an opportunity to develop my knowledge about
analyzing and reviewing rates and prices; and understand the financial process of invoices.
The big benefit of my training is that it doesn’t constraint on one task. My supervisor wanted me
to do various tasks to get a big benefit as much as possible like Online Course tasks, Calculating
Price, Making Invoices and whenever there is problem he wants me to solve it in order to learn.
Also the training was not just to do tasks, there were also meetings and sessions which employees
should attend and that was excellent for me because they gave me new ideas, new thoughts, new
experience, critical ideas and new point of view to the work.
Finally, I would like to give thanks and praise to Allah for giving me the opportunity, knowledge,
and ability to accomplish what I have done during my Coop Training Program. And I Suggest to
Administration of my college, to create an agreement with Saudi Aramco Company to allow more
students to Apply cooperative training there; because the environment of work in the company
helps student to do tasks in good quality of work. The most important point is the company deal
with COOP student as an employee and there is no difference between them. At last, students can
improve their abilities and skills through the period of training.
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References:
1. Saudi Aramco. (2017). Saudi Aramco “where energy is opportunity”. [Online] Available at: http://www.saudiaramco.com [Accessed 28 Feb. 2017].
2. Archive, Aramco world. (2015). 75 Facts: A Beginner's Guide to Saudi Aramco. [Online] Available at: http://archive.aramcoworld.com/issue/200803/flash/75-facts/print.htm
[Accessed 16 Mar. 2017].
3. Saudi Aramco, Intranet, Dhahran, KSA: ARMCO, 2016 Aramco’s Documents.
4. Saudi Aramco, Intranet, Dhahran, KSA: ARMCO, 2017 OAD Manual’s Documents.
5. Majed.AlAhmad. (2017). Invoice process. Saudi Aramco. Dhahran: OAD.
6. Fanack Energy. (2017). Saudi Arabia - Fanack Energy. [Online] Available at: https://energy.fanack.com/saudi-arabia/ [Accessed 27 Mar. 2017].
7. Mahdi, M. (2017). Saudi Aramco IPO to Offer Stake in All Operations of Company. [Online] Bloomberg.com. Available at: https://www.bloomberg.com/news/articles/2016-
10-06/saudi-aramco-ipo-will-offer-stake-in-all-of-company-s-operations [Accessed 10
Apr. 2017].
8. Raval, A., Hume, N. and Sheppard, D. (2017). Saudi raising oil output ahead of Aramco IPO. [online] Financial Times. Available at: https://www.ft.com/content/55265e34-168a-
11e6-b197-a4af20d5575e [Accessed 8 Apr. 2017].
9. U.S.-SAUDI ARABIAN BUSINESS COUNCIL. (2009). the Oil and Gas Sector in the Kingdom of Saudi Arabia. [Online] Available at: https://www.us-
sabc.org/files/public/Oil&Gas_Brochure.pdf [Accessed 20 Mar. 2017].
10. Vision2030. Saudi Arabia. (2017). Saudi Vision 2030. [Online] Available at: http://vision2030.gov.sa/en [Accessed 23 Apr. 2017].
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Appreciation letter:
Appendixes: Appendix A: Certificates of Appreciations
Appendix B: Completed Aramco’s Online Courses:
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Appendix C: Abbreviation
COOP Cooperative Training Program
OAD Operation Accounting Department
CASOC California Arabian Standard Oil
NGL Natural Gas Liquids
CEO Chief Executive Officer
LPG Liquefied Petroleum Gas
IK In the Kingdom
OOK Out of the Kingdom
OSPAS Saudi Aramco’s Oil Supply Planning and Scheduling
ULCC Ultra-Large Crude Carriers
VLCC Very Large Crude Carriers
EDP Early Departure Process
ISGOTT International Safety Guide for Oil Tankers and Terminal
SAP Systems Applications and Products
JVs Joints Ventures
SRTP Secure Real-Time Transport Protocol
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PM Pricing Model
ASCI Argus Sour Crude Index
FSD Finance, Strategy and Development
IPO Initial Public Offering
Table 5: Abbreviation
