Essays on Saudi Aramco Oil Company Case Study

Tags: Company
Download full paperFile format: .doc, available for editing

The paper 'Saudi Aramco Oil Company' is a great example of a Management Case Study. This paper begins by carrying out an overview of Saudi Aramco with reference to both the extraction and distribution of oil around the globe. The next section covers marketing information. Apart from its local market network, Aramco distributes the hydrocarbons to the international market with the United States in the lead. The essay will also cover the financial details of the company, which is obtained from the latest annual review. Saudi Aramco's supply chain and ways in which Information Technology has been used to streamline operations in the company will be covered explicitly.

Finally, the paper discusses two recommendations that are applicable to Aramco Company limited. Company Overview Saudi Aramco is owned fully by the Government of Saudi Arabian Oil and headquartered in Dhahran. This renowned company was established in 1933 when Saudi Arabia and Standard Oil of California signed a concession to survey oil. It is the world’ s largest oil company in terms of output and manages natural crude oil resources. Aramco specializes in the exploitation, production, and distribution of crude oil, petrochemicals, and natural gas.

Oil production plants are located in Abqiq, Yanbu, and Juaymah while the solely owned refineries are in Jeddah, Ras Tanura, Riyadh, and Yanbu. Arabian Gulf and the Red Sea are the major export shipping terminals whilst local demand for these petroleum products is met through a wide network of refineries located in strategic places. Saudi Aramco has infiltrated USA, South Korea, Japan, and China subsequently establishing joint ventures and investments in the field of refining and marketing. The company has representative offices in Kuala Lumpur, Malaysia, and Shanghai China that pursue marketing and sales.

Saudi Aramco owns and operates the largest oil tanker fleet through affiliate Vela International Marine. Market information Saudi Arabia is known to be the world's largest producer and exporter of petroleum liquids. It is second to Russia in the production of crude oil. In appreciation of the fact that Aramco has the responsibility of producing oil in Saudi Arabia, it possesses a 100% market share. It is clear from the company overview that Aramco controls both oil production and refinery markets.

In the refining field, for example, Aramco maintains Joint Ventures with several international companies. The USA is the major export destination for Saudia Arabia’ s oil. In 2009, local demand for oil and gas products was 2.4 million BPD and this capacity was wholly supplied by Aramco (Saudi Aramco Annual Review, 2009). In terms of capacity, the largest supplies of crude oil needs are Saudi Arabia, Iran, Iraq, Kuwait, Venezuela, and the UAE in that respective order. Russia, Iran, Qatar, Saudi Arabia, the USA, the UAE, and Nigeria have the largest reserve of natural gas. Financial analysis Normally, Aramco fiscal year ends on December 31.

It is vital to note that 2008 global financial crisis had a negative impact on oil prices such that there was a drop in the prices of crude oil by about 60% from $145 per barrel in July 2008 to $85 per barrel in 2009 (Saudi Aramco Annual Review, 2009). The price of crude oil has, therefore, remained unstable, varying by more than $20 per barrel. Declining demand, mainly in the Western Jeddah region affected sales.

Diesel and fuel oil were less demanded products between 2008 and 2009. Nevertheless, the decline was not proportional to the world financial crisis simply because of long-term contracts.

Reference

List

Jaffe.J. and Elass, J., 2007. “Saudi Aramco: National Flagship with Global Responsibilities”, in. International Energy Markets, James A. Baker III – Institute for Public Policy.

Marcel, V., 2006. Oil Titans: National Oil Companies in the Middle East. Washington, DC: Brookings Inistitution Press.

Saudi Aramco Annual Review. 2009. www.saudiaramco.com.

Stecke, K. and Kumar, S., 2009. Sources of Supply Chain Disruptions, Factors That Breed Vulnerability, and Mitigating Strategies Journal of Marketing Channels, 16 (3), 193-226

Vitalis, R., 2006. America's Kingdom: Mythmaking on the Saudi Oil Frontier. Stanford: Stanford University Press.

Download full paperFile format: .doc, available for editing
Contact Us