Saudi Arabia's Oil Industry
Any news related to Saudi Arabia's oil industry spreads like wild fire and is always scrutinized till its minutest detail are as clear as daylight. Whether its news relating to Saudi Arabia's declining oil reserves, the ongoing tension between its neighboring states or some new mega projects underway in this vast sandy country; anything and everything is considered important. This is arguably because it is the country with second highest proven crude oil reserves and sixth highest natural gas reserves. Saudi Arabian oil industry shapes the oil market of the world, which in turn shapes the way the world economy functions in one way or the other. It was the largest exporter of petroleum in the world. The United States is said to have overtaken Saudi Arabia as the biggest supplier of crude oil recently in October 2013. Saudi Arabia is also one of the key members of OPEC (Organization of the Petroleum Exporting Countries).
The huge chunk of fiscal reserves of the country's mammoth sized oil industry, are generated by the state owned company Saudi Aramco (officially it is Saudi Arabian Oil Co.). Head quartered in the eastern province of Saudi Arabia at Dhahran, the company states it's goal as- “to remain the world leader in petroleum-based energy”. The company was initially a consortium comprising Standard Oil of California (SoCal), Standard Oil of New Jersey (Exxon), Standard Oil of New York (Mobil) and Texaco. It was the Golden Gimmick deal that led the then king of Saudi Arabia to get 50 % share on oil profits made by the company. With subsequent increase in their stake in the company over the years, the royal family of Saudi Arabia acquired full control of the oil giant. Today it's a state owned enterprise with a turnover of about trillions of dollars (According to Forbes.com; it is biggest oil company in the world generating more than $1billion dollar revenue a day). The company was in news after it declined to increase oil production, having reached its target of 12 million barrels per day; fuelling rumours of peak oil. The company has its reach spread far and wide; exploration, mining, refining, transport and marketing, Aramco rakes in money from all possible petro chemical processes. There are few other petro chemical companies operating in this dessert country; Yanbu National Petrochemical Co, Saudi International Petrochemical Company, Petro Rabigh being some of them.
Saudi Arabia's unique geographical location gives it great leverage in shipping of petroleum products (see figure below). Most of the oil transport takes place at three main ports: Ras Tanura, Ras al-Ju'aymah and Yanbu terminal.
Saudi Arabia's Ministry of Petroleum and Natural Resources and Supreme Council for Petroleum and Minerals are together responsible for the way the country's oil industry functions. They set policies and monitor the functioning of the oil sector. Time and again the functioning of these governing bodies has cemented the fact that it is the rulers of the nation and their inner coterie that actually pull the strings when it comes to decision making regarding Saudi Arabia's natural reserves. The entire management is overseen by the royal rulers.
Given the higher revenue generated by light weight crude oil, the country is moving to increase its production of light gravity crude oil and decrease its production of medium and heavy crude oils. There are numerous new refineries and processing units being constructed at present; most of which are said to be fully functional by 2016. Saudi Aramco Total Refining and Petrochemical Company (SATORP) is a joint venture which entails building a world class refinery. Saudi Aramco itself is planning new ventures at various sites- Jazan Refinery, Sadara etc.
Saudi Arabia is trying to reach newer highs in other sectors as well. Construction is one such sector where the country has its eyes set on setting new records. Kingdom City and Kingdom Tower are two huge projects underway. There's a bee line of contractors in the country; some of the established names include - Krimmley Contracting Company, Civil and Electrical Projects Contracting Company, Saudi Readymix Concrete Company and Bin Quraya.
The entire running of the country depends on its oil industry. Revenue generated from the oil and gas sector are diverted to other domains like infrastructure, education and manufacturing. The country has repeatedly dodged scores of rumuors about its declining oil production capacity and dwindling natural resource reserves and emerged as a long runner in the petroleum race. Though numerous oil producing nations dot the world map, no other country (barring a few) has repeatedly shown their oil might for more than eight decades like Saudi Arabia. Given the tenacity with which the country's rulers, government and oil companies are in search for newer, deeper reserves, it is clear that Saudi Arabia will remain a very important piece of the world's petroleum jig saw puzzle.