aramco
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Aramco
Aramco
Saudi Arabia’s Aramco (formerly Arabian-American Oil Company) is one of the biggest companies in the world. It specializes in exporting oil and natural gas. The headquartered is located in Dhahran, Saudi Arabia. It started as an American company until the 1980s when the Saudi government took it over
In 1932, American geologists discovered a huge field of oil in Saudi Araba. This discovery has attracted many companies; however, in 1933, Saudi Arabia signed an agreement with a Standard Oil Company of California to explore other fields in the country. Max Steineke who is the chief geologist, start to explore the country to find other fields. In 1938. and after five years of unsuccessful oil extraction; the first successful oil well, happened in Dammam (Well No. 7). Because of this discovery, the company’s first exporting tanker that loaded with oil exporting to other countries has started in 1939. Because of the huge success, the company his increased the number of employees to have 3,173 Saudis, 322 Americans, and 141 other employees.
In 1940s, Saudi Arabia and the Standard Oil Company of California merged to create California Arabian Standard Oil Company (CASOC), later changed to Aramco. Armco made Saudi rich and changed the country. The next 20 years, the company has discovered more oil fields, opened schools, and provide jobs was the golden years of Saudi Arabia. Through these years, Saudi Aribia has benefited from oil; schools, businesses, and infrastructure started when the company start to operate, and made the Standard Oil Company of California to move their headquartered to Dhahran, Saudi Arabia in 1952.
In the 1970s and 1980s, the Saudi’s government start to by share of the Standard Oil Company of California. The bought 25% in 1973 and after a year they bought 60% of the company, and in 1980, and after the Israeli-Palestine War, the Saudis government took over total ownership of Aramco.
Since 1863, Aramco has been a stet-owned oil company by the Saudi’s government. Until recently, Aramco has given up 5% of its equity in the market, due to a finical crisis in Saudi Arabia. The Saudi’s government own 95% of the company, and they monopolized the oil industry in Saudi Arabia. Therefore, Aramco has no competition in Saudi Arabia. However, in the United States, the oil and gas industry are not capitalized by the government, so there are more than one company that works in the oil industry, which makes the market for that industry more competitive.
Aramco’s strategy to enter the United States market and compete with other companies is by signing agreements with those companies to help them in producing and billed a partnership. Also, in order to expand more in the United States, Aramco bought 50% of Motiva. The biggest advantage that helped Aramco to compete in the United States is the free market. The United States allows oil and gas companies to operate in their land, in a subsidies and joint-venter agreements, which gave more advantage to Aramco to export in the United States.
The oil industry is one of the biggest market in the world; The oil and gas industry worth around 6.5% of the global economy, which is around $107 trillion. Aramco is the baggiest company that produce oil in the world. In 2017, Aramco has produced 267 billion barrels which is almost 16% of the global total, and that makes Aramco the leading company in producing oil.
Oil is one of the valuable sources in the world, and almost all countries relay on oil. Oil is considered as a limited source, and that what make oil companies to work together to avoid monopoly in the oil industry. Many oil companies have signed agreements to not compete in the oil price. OPEC is one of the agreements that Aramco and other 11 countries have signed to not compete in oil prices.
Where does Aramco operate?
The Aramco expand has benefited the company to have signed many operation agreements domestically, and globally. The company headquarter is located in Dhahran, Saudi Arabia, and after the expand of its oil production in the Saudi Arabia; the company has started to open more facilities around the Arabian Gulf, and the Red Sea. After improvement domestically by providing jobs and helping the economy to improve. Aramco decided to expand its operations. Aramco has started to go globally and operate in many countries.
In the global operations, Aramco has signed many agreements to provide its market and expertise in this field to other countries. Aramco has signed joint- venture, and subsidiary
agreements with other international companions, to help providing Human Recourses with their partners. The company is operating in the three biggest nations; North America, Asia, and Europe.
The joint-venture that Aramco signed with these nations has benefits all parties positively by providing expertise, cooperation, and human resources. Also, Aramco has signed many agreements with individual companies to cooperate with them. Aramco and the United States has been working together since the discovery of oil; the results of this cooperation have drove the company to operate in the United State.
The company start to develop since thin, and it became one of the leading companies that Its specializes in exporting oil and natural gas, and export more to the other countries.
Nature of IB
Aramco’s nature business is to provide oil and refines it into oil products such as gasoline and chemicals. Also, buying and selling other companies petroleum as independent trader. Aramco is the world first supplier of oil production. It supplies more than 12% of oil demand in the world (CNN).
Broad information
Saudi Arabia’s Aramco (formerly Arabian-American Oil Company) is one of the biggest companies in the world. It specializes in exporting oil and natural gas. The headquartered is located in Dhahran, Saudi Arabia. It started as an American company until the 1980s when the Saudi government took it over. According to Professor Paul Gregory in an article in Forbes said the net worth of Aramco is 2 trillion dollars. Recently, the Saudi government has opened Aramco up to outside investors.
The oil industry is one of the biggest market in the world; The oil and gas industry worth around 6.5% of the global economy, which is around $107 trillion. Aramco is the baggiest company that produce oil in the world. In 2017, Aramco has produced 267 billion barrels which is almost 16% of the global total, and that makes Aramco the leading company in producing oil. in the United States the oil and gas industry are not capitalized by the government, so there are more than one company that works in the oil industry, which makes the market for that industry more competitive. And Aramco’s strategy to enter the United States market and compete with other companies is by signing agreements with those companies to help them in producing and billed a partnership. Also, it’s one of the biggest companies that uses offshore to compete in the oil industry. However, The United States allows oil and gas companies to operate in their land, in a subsidies and joint-venter agreements, which gave more advantage to Aramco to export in the United States.
Aramco is a member of the Organization of the Petroleum Exporting Countries (OPEC) which is mean job according to them “is to coordinate and unify the petroleum policies of its Member Countries and ensure the stabilization of oil markets in order to secure an efficient, economic and regular supply of petroleum to consumers, a steady income to producers and a fair return on capital for those investing in the petroleum industry”
Political factor
Saudi Aramco plays a huge role of the political environment in Saudi Arabia. The company it’s owned by the government, but in order to increase their profit; the government does not control the business strategies of the company. However, the government control the political side of the company.
Economic factor
Saudi Arabia’s economy depends on oil production. 75% of the Saudi’s economy comes from oil production. That what make Aramco one of the advanced companies that control oil production and be more innovative than other companies.
Social Factor
Saudi Arabia is a Muslim country, where Islam is the mean law to follow in the country and society and in various aspects of life. As part of the Saudi society; Saudi Aramco has fulfilled its duty by creating jobs, opportunities, and support for small businesses and that wat make the company to build a Corporate Social Responsibility to be part of the Saudi’s community.
Environmental Factors Environmental problems area unit the foremost curtail one for oil producing corporations like Saudi Aramco. attributable to the character of Saudi Aramco's business emission and pollution area unit inevitable and therefore they're absolute to get into controversies. however, Saudi Aramco has done well by taking steps in emission reduction and pollution management. it's taken initiatives to cut back harmful lead content in its merchandise.
Legal Factor
There has been ton of legal implication for the oil firms relating to environmental allegation round the globe. This trend is obtaining high in Saudi Aramco also. the primary comprehensive environmental legislation came into existence in 2001. yet it's taken a robust stance against pollution and industrial wastes and everyone the businesses should abide by it. conjointly most major international oil markets have completely different regulation of their own
Technological Factors
In recent years Saudi Aramco has shown improvement technological advancement which may be seen in the successful implementation of huge scale projects before schedule. At the same time the worldwide shift towards cleaner and greener technology as well as alternatives fuels are often one in each of the explanations to ruminate upon for Saudi Aramco additionally as different oil corporations.
Rivalry(medium)
The level of rival that Aramco face is medium. Since Saudi Arabia does not allowed other oil companies to operate in Saudi Arabia, Aramco has an advantage domestically. However, globally, Aramco has a lot of completions such as Shell, Bp, and Exxon. And they have an advantage of holding large oil reserve.
Competition (medium)
There are five companies that compete with Aramco in similar and different field:
· Schlumberger: is the world first supplier of technology.
· Statoil: is the world largest offshore operation.
· Nation Oillwell Varco: is Specialized in design and manufacture oil equipment
· Shell Global: is one of the largest oil companies.
· Halliburton: provide products and services in oil industry.
Supplier and Buyer Power (low)
The supplier power cannot control the oil industry in Saudi Arabia. However, the competition between companies that signed the OPEC agreement and the companies that did not sign could affect the oil prices, so other countries tend to buy from the best offer. However, because of the OPEC agreement, counties who in this agreement cannot control the oil price. Aramco does not relay on other suppliers. The company operates its own, so the level of supplier power is low due to the independence in drilling and explores its own oil.
Buyer power (low)
In the Domestic market, Aramco control the price because it is owned by the government. But globally, Aramco is a member of the Organization of the Petroleum Exporting Countries (OPEC) which controls the global price of oil and the production of oil. Therefore, the buyer cannot control the price of the oil, so the level of buyer power low.
Threat of New Entry (low)
There is a huge barrier that stops companies to enter the oil industry field, such as
· Capital Requirements: the requirements to get oil is too expensive.
· Reputation: to build a reputation, companies have to compete in oil prices, and the quality of the oil.
· Access to Distribution Channels: most of oil fields are taken by other companies.
· Government Policies: some countries will askes for interns.
· Economies of Scale. Large companies can produce oil in lower cost, because of their equipment or expertise in this field.
· Patents
Aramco has not any threat of entry inside the Saudi’s market, duo to the government control of
Oil, neither the other companies. It is hard to enter the oil industry due to the sensitivity of this area; oil is a valuable source and countries would not give up their sources to any company, but they would agree if the company would offer share of their stake.
Threat of Substitute (low)
oil is the number one energy source, that many countries relay on. However, with the technology there could be other energy sources, which might affect the oil industry. If we going to take about what the other substitute that is coming in the near future. Electrical energy and solar energy are the two kind of energy that might take place in the future. also, other energy companies who start to develop new type of energy that would take a place in the future instead of oil.
SWOT Analysis
As many companies, Aramco has some major advantage and disadvantage that could benefit the company.
SWOT ANALYSIS
|
strength |
weakness |
|
· The biggest producer of oil in the world · Low cost production · Affordable for consumers · Progressive upstream technologies
|
· Relay on oil · Most sales are on crude oil
|
|
opportunity |
threat |
|
· Great quality of oil · Huge investment in the capital · Strong consumer demand of the oil · The relationship with many countries |
· Economy depuration · New source of energy · Limited sources of oil |
Strength
Aramco is the largest oil producer, and according to them they have produce 267 billion barrels by the end of 2017, and that because of the Progressive upstream technologies which allowed them produce in low cost.
Weakness
Aramco and Saudi araba in general relay on only oil production and sales, and heavily relay on crude oil. And we know that oil is a limited source, so that is considered as a weakness for the company.
Opportunity
The quality of Aramco’s oil is one of the reasons why it has strong demand of consumers.
Over the years Aramco have billed a business relationship with many countries.
Threat
In Economy depuration, that what happened to Saudi Arabia in 2017, and that what made the government to offer 5% of the company and the threat of new energy source could affect the company and the oil industry in general.
Countries of operation
Saudi Aramco has grown to become the world’s largest integrated oil and gas service, employing over 65,000 people. alongside its subsidiaries and affiliates, we tend to square measure represented within the three major global energy markets of Asia, North America, and Europe.
Aramco global operations and markets square measure served through subsidiaries, joint-venture and shareholding relationships with alternative international partners.
America
U.S Aramco
There are three main offices in the United States that are part from the United, Saudi subsidiary
Agreements.
· Taxes
Aramco services company (ASC) is the Americas-based subsidiary of Aramco. The ASC has three main offices in Taxes that located in Houston, Boston, and Detroit. The main objective of these offices is specialized in categorizing upstream and downstream technologies, offering practices and training the students and employees in North America, sourcing goods and services, and engineering services.
· Washington D.C.
The office in Washington D.C. is responsible for representing the company’s interest in wider objective. The Washington office, focuses in building a government relations, economic and political analysis, and public and cultural affairs.
· New York
The New York office is in charge of providing market support services. Also, its responsible for lording, storage, transportation, and the delivery of the cured oil that bean export from the headquarter in Saudi Arabia.
Asia
Our international operations and markets are served through subsidiaries, joint-venture and shareholding relationships with other international partners. Saudi Arabia, through Saudi Aramco, is that the favorite crude oil provider to six major Asian countries — China, Japan, South Korea, Taiwan, the Philippines and India — however our relationship with the region goes so much on the far side the reliable provider of crude oil energy to incorporate research alliances, materials supply, education, engineering and technical services, training and different mutually beneficial endeavors. With offices in Beijing, Shanghai, and Xiamen and new Delhi, Aramco Asia is a key player within the region’s spirited energy market and is supported by integrated country offices in Japan, Republic of Korea and Singapore. Under AN aligned regional strategy, every country workplace provides selling and portfolio management services and different business support to the U.S. and our partners.
Europe
Based in The Hague, the Netherlands, Aramco Overseas Company is that the European subsidiary of Saudi Aramco. The network of our European offices offer a good range of services as well as financial support, offer chain management, technical support services and a variety of administrative support services. The Hague office's information center is that the communications hub for our world operations. From this base, we tend to direct several of our international operations through four offices in Europe also has 5 offices across the Asia Pacific regions.
Reference
https://www.investopedia.com/university/releases/moneysupply.asp
http://www.saudiaramco.com/en/home/about/who-we-are.html
https://datafox.com/competitors/saudi-aramco
https://core.ac.uk/download/pdf/56366463.pdf
http://www.academia.edu/15072891/Saudi_Aramco
https://www.bakerinstitute.org/media/files/page/98a641f6/noc_kobayashi_saramco.pdf
