Do you have any idea about the most profitable company in the World? It is none other than Saudi Aramco which is supposed to be the largest oil exporter and the most profitable organization all across the globe. The company is situated in Saudi Arabia.
There are 270 billion barrels in stock in the company. The approximate valuation of the company is nearly $5 trillion. As of the first half of 2019, the net worth of the company was $46.9 billion.
The company has made an investment of $100 billion in India. We are going to give you a comprehensive case study on Saudi Aramco so that you may learn in what way the company has managed to become the most profitable corporation in the whole universe. So, without wasting any more time, let’s dive in.
A Short Overview of Saudi Aramco
Standard Oil Co. of California set up this state-owned oil company, Saudi Aramco in 1933 in Saudi Arabia. This 87-year-old company is officially famous for the Saudi Arabian oil company and is based in Dhahran, Saudi Arabia.
According to income and profit, the company is supposed to be the largest corporation all over the globe. The company secures the second position in daily production all over the universe. The company has a stock of 270 billion barrels. The organization began to produce oil commercially in 1939 but was officially built in late 1988. The company is running the largest single hydrocarbon network system in the universe.
How did Saudi Aramco Start its Journey?
Before introducing Saudi Aramco there was a deal between the Saudi Arabian Government and Standard Oil Co. of California. The company began to produce oil commercially for the first time in 1939.
Then the company keeps expanding its distribution efforts continuously. The company started to produce 5, 00,000 barrels every day in 1949. It was also trying to develop a pipeline. The company managed to complete the 1212 km pipeline between Trans and Arabian in 1950. This is supposed to be the largest pipeline all across the globe. With the help of this pipeline, the company was able to export its oil to Europe and decrease transportation costs. The company developed its production operation very fast and crossed another milestone in 1962 by producing 5 million barrels of crude oil.
The Saudi Arabian Government bought a 25% share of the company in 1973 and after that, the government of Saudi Arabia extended their share to 60%. However, the Arabian Government bought the rest of the stakes of the company in 1980. The growth of the company did not stop. They began to invest in various international organizations and began their multinational partnership. The company bought a 35% share of the S-Oil Company of South Korea in 1991.
What is the Business Model of Saudi Aramco?
We all know that Saudi Aramco is an oil production corporation. A considerable part of Saudi Aramco contains oil exploration. That is why the company has a professional crew of geophysics and geologists. They have created an advanced research center for connecting their investigation.
They have a very simple business model: they explore oil and build their refinery. Oil is produced in a refinery and they export oils to various nations and corporations. The company also operates a defining chemical business. The capacity of the company is now 5.4 million barrels every day. The company owns a lot of oil refining ventures. A few of them are based in Saudi Arabia and the rest are based in Europe, Asia, and the United States. The company also trades with chemicals. It also operates a shipping business through which companies ship refined oil, crude oil, and natural gas to various nations.
How much profit did Saudi Aramco Make?
Saudi Aramco is the largest profitable and revenue-generating corporation in the globe. The company even surpassed Google and Apple. As of 2018, the net worth of the company was $111.1 billion while the net worth of Apple was $59.5 billion. So, it is quite evident that the company was very profitable. We do not have any idea about the revenue of the company before 2018 as the company did not disclose its financial data publicly before 2018 as it was intending to introduce its first initial public offer.
Investment of Saudi Aramco in India
The company has invested a lot globally. Likewise, it has also made investments in India. The first strategic investment of the company in India was $44 billion in which the company held a 50% stake jointly.
Indian Oil Corp, BPCL, & HPcL owned the rest of the shares. The company also made an outstanding contract with Reliance Industries. The company has made an investment of $15 billion in exchange for a 20% share in Reliance Oil to Chemical for %75 billion worth.
The contract was supposed to be the best FDI contract for India. The corporation also supplied 5, 00,000 ride oil barrels to Reliance Industries Limited Refinery at Jamnagar regularly.
Who is on the Management Team of Saudi Aramco?
The government of Saudi Arabia is the owner of the most popular Saudi Aramco company. The company has selected Amin H. Nasser as the CEO and president of the company. HE Yasir Othman Al- Rayyan is the chairman of the company.
The Biggest IPO in the World by Saudi Aramco
The company introduced its initial public offer in 2019. The company values her initial public offer at $2 trillion. But as per a survey conducted by Bloomberg, the poll reveals that 40% of investors estimated it as $1.2-$1.5 trillion and others estimated it at $1.1 trillion or less than that. The company managed to raise $25.6 billion from the initial public offer. This is supposed to be the highest amount any company has managed to raise till now in the world. The company cracked the history of Alibaba-A Chinese E-commerce Giant. The share of the company began exchanging on 11th December for 35.20 SAR. 38.70 SAR is the highest share price of the organization and 34.25 SAR is the lowest share price of the company.
Which Companies are Acquired by Saudi Arabia?
- Saudi Aramco managed to acquire SABIC which is a diversified manufacturing organization. The company acquired it on 27th March 2019 for $69.1 billion.
- Saudi Aramco also acquired ARLANXEO which is a rubber company. The company acquired it on 8th August 2018 for $1.6 billion.
What are the Plans of Saudi Aramco for the Future?
The company has constantly worked fast to develop its business. The plans of Saudi Aramco for the future are as follows:
- The company wants to grow its business and make it a technology and knowledge-driven corporation.
- The company is planning to double its refining capacity by 2030.
- The company is planning to expand its business into chemicals.
- The company is going fk create new technologies by utilizing its investigational development endeavors.
- The company is planning to invest in new business lines.
- The company is planning to acquire more companies.
Which Refineries are Owned by Saudi Aramco?
- Jazan Refinery and Terminal Projects
This refinery is situated in Jazan, Saudi Arabia. The construction of the company is running. The refinery created 400000 bBI per day.
- Jeddah Refinery
The refinery is situated in Jeddah, Saudi Arabia. The refinery produces 78,000 bbl every day.
- Ras Tanura Refinery:
This refinery is situated in Ras Thira, Daidi Arabia. The company produces 5, 50,000 daily.
- Riyadh refinery :
This refinery is situated in Riyadh, Saudi Arabia. The company produces 126,000 per day.
- Yanbu Refinery
This refinery is situated in Yanbu, Saudi Arabia which produces 245000 per day.
What is the Effect of Covid-19?
- Due to Covid-19, the upstream revenue of the company reduced by 70% in Q2 2020 compared to Q2 2019. Although there were a lot of issues, the company managed to retain a profit at that time like other popular oil and gas companies.
- The company chose to reduce its capital budget for the year by more than $12 billion in March after the viral attack. They set the budget within $25 to $30 billion. Thus the development projects have been delayed by the corporation.
- The company came public in December 2019. It has become the most important command all over the globe. Within a few months, covid 19 pandemic hit and destroyed the economies of the entire world. But the company chose to boost its income payment to $18.75 billion to retain investor enthusiasm and enhance the fiscal budget of the government as they had indicated a $60-70 each barrel earlier on which their budget is created.
- The company experienced a crucial net worth decrease in Q2 because of the drop-down in global demand and oil prices. In comparing the other important oil and gas companies, the stock prices of Saudi Aramco remain stable as the company offered additional shares to retail investors who maintained their shares till now.
The demand for oil and gas took a great hit globally because of the global pandemic. The company failed to acquire targeted profits. But there was a growing trend after the recovery in 2021. This implies that the company has a high possibility of increasing its market share and retaining its profitability.The company has a few outstanding scopes in the future to conserve its top position among its adversaries. The company is going to sign 59 corporate procurement agreements along with 51 domestic and international manufacturers in the next 10 years. So, hopefully, it will create 5000 new jobs in Saudi Arabia. The company is planning to increase the value chain from oil to chemicals. That is why, the company is making the biggest investment in South Korea for establishing one of the biggest refinery-integrated petrochemical steam crackers. This investment has a great possibility for the company. If you are finding it difficult for you to write a case study on this topic you may contact My Assignment Writing Help without any hesitation.
FREQUENTLY ASKED QUESTIONS
- What is the Valuation of the IPO of Saudi Aramco?
The company introduced its initial public offer in 2019 which is valued at $2 trillion by the company.
- Who is the Owner of Saudi Aramco?
The government of Saudi Arabia owns Saudi Aramco. The CEO and the president of the company is Amin H. Nasser.
- What is the Net Worth of Saudi Aramco?
The net worth of Saudi Aramco is over $2.03 trillion on the Saudi exchange.