Saudi Aramco: Building lasting relationships through oil
Saudi Aramco, the world's largest producer and exporter of crude oil, manages the largest oil reserves on earth.
Saudi Aramco's current sustainable production capacity for crude oil is 10.8 million barrels per day (bpd), which includes a spare production capacity of 1.5 to 2 million bpd.
Spare capacity is the key to stability in the world oil market, and Saudi Aramco is committed to maintaining spare capacity and drawing on it when warranted by market conditions, as directed by the Saudi Arabian government.
Even though it is expensive to develop and maintain this huge buffer, the Saudi Arabian government has adopted this strategy in the interest of preserving market stability and helping protect world economies during periods of uncertainty.
Saudi Aramco's commitment to stable energy supplies is particularly important in the Far East, where more than half of the company's crude oil is shipped. China imports a large portion of this as its economy grows at a robust rate and its need for energy grows along with it.
China is a natural market for Saudi Arabia's crude oil. China's rapidly growing economy, matched by a robust increase in demand for energy from various sources, including from crude oil, presents Saudi Aramco with an opportunity to expand its volume of supply to China.
While reliable supply of crude oil to its customers is Saudi Aramco's core business, the company is also interested in participating in commercially and strategically viable incremental downstream projects by adding value to crude oil via refining and petrochemicals production.
Participating as a shareholder in the Fujian Integrated Project with two of the world's largest refiners and petrochemicals producers, Sinopec and ExxonMobil, will allow Saudi Aramco to make a positive contribution to China's economy while enjoying a portion of the downstream revenues generated by the two joint ventures associated with this project.
Power to provide
According to the International Energy Agency, in 2004 China overtook Japan to become the world's second-largest oil consumer.
By 2030, Chinese oil consumption is expected to more than double, rising to over 13 million bpd.
Even more critically, China's oil imports will increase nearly five-fold over the same period, to nearly 10 million bpd-roughly equivalent to the United States' current crude oil imports, according to the agency.
As Saudi Arabia is the nation with the most extensive reserves of crude oil and the largest petroleum production and export capacity, Saudi Aramco, as Saudi Arabia's national oil company, is seen as one of the main suppliers of crude oil to China.
"We stand ready to deliver the oil China requires, just as we have delivered on our promises to global markets for over seven decades," said the company.
"The roots of our ability to provide lie-deep underground, with prodigious quantities of oil and gas locked away within the earth."
The company currently manages some 260 billion barrels of crude, accounting for roughly a quarter of the world's proven oil reserves.
Despite that unmatched scope, Saudi Aramco continues to expand its resource base.
According to a conservative estimate, the company's additional potential of recoverable oil is projected to be in the range of 200 billion barrels.
"But we recognize that reserves in the ground mean little unless they can be delivered reliably and responsibly," the company said.
"So when it comes to supplying energy to global markets we operate one of the largest and most sophisticated petroleum infrastructures on the planet."
Aside from its size, that system has also compiled an enviable record of reliability and earned a reputation for operational excellence. This is due in part to the flexibility of oil and gas facilities of the company, which include backup systems in individual plants, are designed to provide multiple redundancies across the entire network as well.
With advanced technology in all its business fields and a well-trained, highly motivated workforce, the company does not only enhance its performance but also lightens the environmental footprint of its hydrocarbon activities.
As with reserves, Saudi Aramco is equally proactive when it comes to planning for future production.
Before the end of this decade, the company plans to expand its production capacity from 10.8 to over 12 million bpd-with scenarios to boost this to even 15 million bpd if required.
The company already has in progress six oil production projects that represent a combined production capacity of more than three million bpd, some of which will offset natural decline while the remainder will serve to expand its total production capability.
"These initiatives will allow us to maintain a surplus production capacity of 1.5 to 2 million barrels a day even as our actual production grows, in keeping with the Kingdom's commitment to world markets," the official said
Strong partnership
Saudi Aramco is building strong, long-term relationships with leading Chinese petroleum companies.
The company established a sales and marketing subsidiary office in Beijing back in 1998, at a time when China's crude oil imports were small.
Since then, it has established close supply relationships with China's leading refiners - bonds that will continue to strengthen over time.
One of the most fruitful partnerships the company enjoys in China is with Sinopec.
The relationship between the two companies is a model of synergy, and shows what is possible when two leading firms join forces, combining their respective strengths and expertise in a wide variety of endeavors.
In March, Saudi Aramco formed two joint ventures with Sinopec and ExxonMobil respectively, which will expand an existing refinery complex in Fujian to provide additional quantities of refined products and petrochemicals.
Because the petrochemical industry provides a wide range of inputs for other industries, this project is vital not only for Fujian Province but also for China as a whole.
The partnership between the two companies does not end there. They are also working together to explore the feasibility of developing a new grass roots refinery in Qingdao, Shandong Province in East China.
"Saudi Aramco is honored to be partnering with China in this journey toward prosperity, ensuring that the growing petroleum needs of this great nation are met reliably and responsibly, sharing the risks and reaping the rewards of our joint energy future.
"We have set a course for even greater prosperity, and through cooperation, mutual endeavor and shared dedication, we will arrive at that destination together."
(China Daily 09/22/2007 page6)
