Saudi Aramco Group Project Revision of Management Functions

Saudi Aramco Group Project: Revision of Management Functions & Strategy of Saudi Aramco By: Zaki A. Al-Nassif ID# 201102844 Faris Azzahrani ID# 200900688 Mohammed Al-Sonayin ID# 200901862 Omar Al-Essa ID# 200901819

Outline • • Overview. Revision of Saudi Aramco Vision & Mission. Saudi Aramco External Environment Assessment. Saudi Aramco Internal Environment Assessment. Analysis of Management Functions in Saudi Aramco. Describe changes in Saudi Aramco. Conclusion. 2

Overview • Saudi Aramco is the world’s largest oil company that exports energy from the Kingdom of Saudi Arabia to the world. • In the early 1930 s, the Standard Oil Company of California which later known by Saudi Aramco was established after signing a concession agreement to search for oil in the Kingdom of Saudi Arabia. • Saudi Aramco manages the world’s largest proven conventional crude oil and condensate reserves of 259. 7 billion barrels. • The average daily crude oil that Saudi Aramco produced in 2011 was 9. 1 million barrels per day (BPD). • Also, Saudi Aramco has stewardship over the world’s fourth-largest natural gas reserves of 292. 6 trillion standard cubic feet (SCF). 3

Revision of Saudi Aramco Vision and Mission • Saudi Aramco mission statement as stated by its Supreme Council is as follows: “Our mission is to remain committed to provide energy to the world and to maximize the value of the country's petroleum reserves for the benefit of the Kingdom's citizens. ” • Saudi Aramco management state its vision statement as follows: “Our commitment to remain the world’s leader in the production of petroleum-based energy is complemented by our commitment to help solve a host of pressing issues. We believe we can make a difference wherever we do business by investing in innovation and entrepreneurship, creating educational opportunities, powering economic progress, increasing environmental awareness, and working in partnership for energy sustainability. ” 4

Revision of Saudi Aramco Vision and Mission • The vision for the future that Saudi Aramco has is best described through the company’s 2020 Strategic Intent as follow: Ø Shaping Saudi Aramco business portfolio through establishing an integrated value chain approach in its crude oil mix, further develop the Kingdom’s unconventional gas resources and become a leading global chemicals and refining company. Ø Supporting the Kingdom in building a vibrant energy industry by promoting an energy efficient economy, developing alternative energy options, and building a technology portfolio. 5

Revision of Saudi Aramco Vision and Mission Ø Delivering an agile, flexible, and efficient organization to achieve operational excellence and world-class reliability and safety performance through improved operational efficiency, agile decision-making and budgeting activities, insightful performance measurements, and business process improvement. Ø Building capacity, knowledge, and skills to improve Saudi Aramco processes and systems of leadership selection and development, performance evaluation, innovation, and research and development. Saudi Aramco will take the lead in developing a knowledge-based economy in Saudi Arabia. 6

Saudi Aramco External Environment Assessment. • OPEC "Organization of the Petroleum Exporting Countries". • ARAMCO Goal to Employ domestic citizens. • ARAMCO and Government Relationship. 7

OPEC "Organization of the Petroleum Exporting Countries" • OPEC stands for the Organization of the Petroleum Exporting Countries. This Organization is one of the most important external factors that affect Saudi Aramco; it has the ability to stabilize the Oil prices in the whole world. OPEC also has applied its first policy which is "Petrodollar" policy, this policy force any foreign currency wants to buy Oil from OPEC members companies to exchange their currency to US Dollar then buy from US dollar the quantity of Oil needed. • This Operation makes the US Dollar the most sensitive and needed to stabilize because all countries from China to Germany depend on US Dollar. OPEC comes now to stabilize the most important and consumed material in the worlds (Oil) by increasing supply or lowering prices due to US dollar depreciation. Lately the Oil supplier in the world like Libya and Iran faced political issues that lower the oil supply quantity, therefore OPEC calls for Saudi Aramco and others such as Qatar Petrol and Chevron to increase their supply and return stabilization back to the old price. Also OPEC tries to cover some US Dollar purchasing power lost during the not yet ended depreciation that started in 2008 8

Saudi Aramco Goal to Employ domestic citizens. • Saudi Aramco has a lot of efforts that improve the Saudi’s society, the lifestyle of Saudi’s citizen and promoting community Health and Safety awareness: – – – – Traffic Safety Awareness campaign Portable Safe Driving Simulator Breast Cancer Awareness campaign Saudi Aramco Wellness Program Smoking Cessation Program Nutrition Week Ramadan and ‘Id celebrations Summer cultural Programs. • 9

Saudi Aramco and Government Relationship • Another external important partner to Saudi Aramco it’s the Saudi’s government. Saudi Aramco has outstanding Relationship with the Saudi’s government. This Oil country needs government support to run the business, so the first years of Oil discovery, Kingdom of Saudi Arabia always made it easier and more safe to run business Oil company by providing them support and security. . 10

Saudi Aramco Internal Environment Assessment. • SWOT Analysis. • Facing the challenge. 11

SWOT Analysis TABLE 2. SWOT MATRIX OF SAUDI ARAMCO Strengths The world’s largest reserves production capacity. Weakness Access to low cost oil and gas production assets. Advanced upstream technologies and highly High crude oil price and sufficient investment capital. Threat Raising domestic gas demand growth and potential gas supply crunch Strong oil demand growth, especially in Asia Relatively small downstream capacity TABLE 2. SWOT MATRIX OF SAUDI ARAMCO Good relationship with the government. Opportunity Heavy dependence on sales of a single commodity (crude oil). motivated employees Sour crude oil Potential slowdown of world oil demand growth caused by the recent high oil prices Saudi Arabia’s accession to WTO Cyber Attacks 12

Facing the challenge • Saudi Aramco has become more aggressive in its exploration activities over the last few years: This is a strategy to solidify the company’s strengths with opportunities as they arise, namely, a tactic to discover additional low-cost oil and gas reserves with a sufficient amount of investment. • Saudi Aramco’s effort to raise production capacity and to secure surplus capacity is also considered a strategy to reinforce its current strengths by taking advantage of this opportunity. • Saudi Aramco has accelerated its investment in the refining sector in recent years. • Saudi Aramco’s strategy to take advantage of the petrochemicals sector in an attempt to benefit from the Kingdom’s acceptance into the WTO as well as to diversify the company’s crude oil-oriented revenue structure. 13

Analysis of Management Functions in Saudi Aramco • Real Owner of Saudi Aramco • The seven business lines • Company Type, productivity, and branches around the world • How Saudi Aramco leading and controlling their employees 14

Saudi Aramco 15

Describe changes in Saudi Aramco. • The 2020 Strategic Intent • What will the future Saudi Aramco? • What a successful transformation will? 16

The 2020 Strategic Intent 17

What will the future Saudi Aramco? 18

What a successful transformation will? 19

Thank you 20