Opportunity Arabia 2014: Joep Straathof

Editor's Notes

1. Oil reserves Gas reserves World production Global refining capacity
2. The company’s founding idea was based on being a provider of opportunity. That idea originated with King ‘Abd al-‘Aziz Al Sa‘ud, the founder of the Kingdom. The original concession agreement, signed in 1933, contained a provision calling on the company to provide opportunities for Saudi citizens. { CLICK } In 1938, resources were found in the Kingdom. From the very beginning we were an oil company. And that remains our core business. But you can see from this graph that over our 80 year history we have grown significantly in scale and scope and have moved from a single oil business to a multi-business portfolio. And today, we are pursuing even greater levels of growth that will set the stage for us to provide even more opportunity. Let’s look at how. { CLICK }
3. Everything we do is based on a set of core beliefs: We believe energy is a fundamental driver of opportunity. We believe that our products, very much like yours, contribute to abundant choices and an improved quality of life for millions of individuals around the world. We believe reliable access to energy allows companies to invest and economies to grow. We believe that through our unique position and core competencies, Saudi Aramco can and should, make contributions to solving the world’s energy challenges. These beliefs are guiding us on a journey that is making Saudi Aramco a more streamlined, efficient and competitive company, a globally sought after employer … and a greater contributor to the quality of life of people both here in the Kingdom and in the communities we serve around the world. { CLICK }
4. Our presentation centers on five strategic focus areas: { CLICK } Maintaining our upstream leadership position { CLICK } Pursuing growth downstream in refining and chemicals { CLICK } Maintaining an innovation pipeline to drive innovation { CLICK } Our role in further developing the broader energy sector here in the Kingdom { CLICK } And our commitment to positively impacting the communities in which we operate { CLICK } Let’s look at each one of these in more detail. { CLICK }
5. A critical aspect of our upstream strategy is designed to help us maximize the value we create upstream while making the most of the opportunities we have downstream. We understand that our commitment to maintaining a maximum sustainable capacity of 12 million barrels per day creates predictability for our partners, our customers and global markets. And because we take a long-term approach to managing our reservoirs we have a recovery rate nearly 2 times the world average.
6. To meet global energy demand well into the future, we use industry-leading technology to continue exploring for - and developing - fields across Saudi Arabia, both onshore and offshore. In fact, through our technology applications we have been able to replace every barrel of oil we produce through improving recovery rates and new discoveries. Our 2012 discoveries included one oil field — Aslaf – and two gas fields – Sha’ur and Umm Ramil. We discovered an additional five fields in 2013 — bringing our total oil and gas field discoveries throughout our history to 121. Footnote: Our 2013 discoveries included — three oil fields Al Haryd, Duhul, and Salsal and two gas fields Turayqa and Mihwaz
7. We are actively pursuing unconventional gas. In fact we are the 1st in the region to discover and commit unconventional gas resources to customers. That gas will go to a 1,000 megawatt power plant, which will feed a massive phosphate mining and manufacturing center in the Northern Region, and will drive that area’s development and prosperity. { CLICK } Unconventional gas will bring many benefits: It will allow us to supplement the Kingdom’s gas supply and allow us to reallocate crude oil for higher value applications. It will reinforce Saudi Aramco’s position as a reliable global supplier of energy and it will play a key role in optimizing the Kingdom’s energy mix. { CLICK }
8. We see downstream activities as the growth engine of our business. As mentioned earlier our combined global refining capacity stands at 4.9 million barrels per day. Our downstream strategy will shift our refining business from a series of independent refinery investments to a more holistic global refining business model. And we have plans to nearly double our refining capacity to 8 million barrels per day which would make us one of the world’s top refiners. { CLICK } Footnote: Petro Rabigh (37.5%) Samref (50%) Sasref (50%) SATORP (62.5%) Motiva (50%) S-Oil (35%) Showa Shell Sekiyu K.K. (15%) Fujian Refining and Petrochemical Company LTD (25%)
9. Beyond just the scale of our refining business, our network has a global footprint that includes: { CLICK } Wholly-owned refineries in the kingdom of Saudi Arabia { CLICK } Joint venture refineries in Saudi that have attracted international investors to the kingdom. { CLICK } and International joint venture refineries, partnering Saudi Aramco with other majors to deliver refined products in the U.S., Korea, Japan and China. This is a strong foundation on which we will expand and integrate our refining network.
10. Innovation in technology and research & development is a priority here at Saudi Aramco. And you can see that play out here in the growing number of patents our company has received over the past few years. Our goal is to contribute enough game-changing innovations for our industry that it results in more than 100 patents per year. And we recently received international recognition for our innovation efforts: We received the Innovative Thinker Award - for our contributions to real-time reservoir management … And the New Horizons Award - for a “cutting edge” invention that tracks the physical movement of marine oil spills in real time. So we recognize in Saudi Aramco that innovation is the key to driving our business forward. { CLICK } Footnote: 2012 – 58 patents, 2013 – 57 patents. Total: 274. About 7 % of our patents are jointly owned
11. One of our strategic pillars centers on our engagement with the Kingdom. One way we have chosen to do that is to spur the creation of a vibrant and globally competitive Saudi energy services sector. By leveraging our core business activities we can help { CLICK } support the expansion of local manufacturing { CLICK } Enable the growth of industrial clusters that serve our operations { CLICK } Create the right conditions for foreign and direct investment { CLICK } Prepare the local workforce to take advantage of new employment opportunities { CLICK } Foster entrepreneurship by providing access to funding, expertise and guidance { CLICK } Facilitate localization of needed goods and services By strengthening our business we can be a better corporate citizen and help to ensure a sustainable future for generations to come. { CLICK }
12. Because we care about giving back to the people of the Kingdom, Saudi Aramco is focusing on: Sustaining economic growth and development, helping communities thrive, building the Kingdom’s knowledge base for the future and advancing environmental solutions. Most proud of: SAO spent almost $ 37 bln. in materials and services sourced and produced locally 10,000 young Saudis through an educational program called iSpark <1 % gas being flared from our raw gas production, contributing to Saudi Arabia being a global leader in flared gas reduction
13. Shaybah: NGL facility, 2.4 bln. scf/day of low-sulfur sweet gas and extract 240,000 bpd of NGL. (2014) Jazan Refinery: 400,000 bpd refinery and terminal on the Red Sea near Jazan. (2016) Wasit Gas Program is set to become the largest gas plant in the Kingdom when it is completed in 2014 with a production capacity of 2.5 bln. scf/day. (2014) Sadara: Largest petrochemical facility ever built in one single phase, Sadara, located in Jubail Industrial City II, is a joint venture with The Dow Chemical Co. Employing will produce over 3.2 million tons of performance, value-added chemical and plastics products.
14. Next four years: capital budget of almost $125 bln. of which over $40 billion will be the following materials: Pipes and structural steel: (30% localization) Columns, vessels, exchangers and valves (20% localization) Compressors, pumps and turbines: (5% localization) Instruments, electrical and transmitters: (20% localization) Chemicals, drilling fluids and inhibitors: (45% localization) Drilling and producing equipment: (20% localization) Health, safety, security and fire equipment: (5% localization) Construction and general supplies: (20% localization)
15. In-Kingdom manufactured goods Imported goods warehoused in-Kingdom Goods imported by local vendors Imports through OOK offices
16. Next four years: capital budget of almost $125 bln. of which over $40 billion will be the following materials: Pipes and structural steel: (30% localization) Columns, vessels, exchangers and valves (20% localization) Compressors, pumps and turbines: (5% localization) Instruments, electrical and transmitters: (20% localization) Chemicals, drilling fluids and inhibitors: (45% localization) Drilling and producing equipment: (20% localization) Health, safety, security and fire equipment: (5% localization) Construction and general supplies: (20% localization)
17. Strategic directive for 2017: 75%
18. Sales office Stockist Repair shop Assembly Production OEM
19. Pipes and steel structure Machinery equipment Chemicals Static equipment Instrumentation, electrical, IT Drilling
20. Carbonate reservoir product development Well intervention design
21. Premium Exclusive bidding Long term agreements
22. Employment of Saudi’s National policy of the Kingdom Targets defined by company size
23. Main mission of NBD is: to enhance the company’s potential to increase revenue and to support the kingdom’s goals of maximizing economic and social benefits from its natural resources….“
24. Historical consumption figures for feasibility study Technical and quality requirements (international and Saudi Aramco standards) Guidance in investment process Registration/approval of manufacturing plant
25. Business opportunities Wide network Knowledge and expertise Alignment
26. Subsidiary Services provider The Netherlands
27. Sourcing Engineering Purchasing Quality Expediting Logistics
28. Strategic Sourcing Supplier Relations Group