Find comprehensive SWOT and PESTLE research reports across industries globally

Holistic Analysis Customized Solutions Top Quality

Thanks for downloading our report! X
Check your email for the requested analysis report.
Be sure to place support@swotandpestle.com on your approved senders list to prevent emails from going into spam.

Saudi Aramco SWOT & PESTLE Analysis

Last Updated : 13 Aug, 2017

OVERVIEW

Name of the Company: Saudi Aramco

Business Sector: Oil & Gas

Operating Geography: Middle East, Saudi Arabia, Global

About the Company: Saudi Aramco (Saudi Arabian Oil Company) is the state owned oil and gas company of Saudi Arabia. Established in 1993, it has an estimated reserves of 261.6 bn barrels of crude oil and 297.6 trillion scf of gas. It is by far the largest energy company in the world with an estimated valuation between 2 to 3 trillion USD and employs more than 65,000 people globally.

Revenue: USD 311 Billion (FY ending March 2011) - Last officially published

SWOT & PESTLE Analysis

The SWOT analysis for Saudi Aramco is presented below:
Strengths
Weaknesses
1. Huge production & refining capacity
2. High downstream operations and marketing capabilities
3. Pioneering advancement in technology & ecologically sustainable growth
1. High dependency of company’s profitability on crude oil sales
2. Corporate governance and transparency is an issue at Aramco with very few disclosures made by the company
Opportunities
Threats
1. Global economic growth driving consumption of energy and increasing dependency on fuels
2. Saudi Aramco’s IPO will bring out the real valuation of the company and ensure more financial and operational transparency
1. Decrease in global market share owing to newer exploration capabilities of other countries
2. Continued focus on renewable energy and non-conventional sources of energy
Get Your Free Summary Copy of the
SWOT & PESTLE Analysis Report
Get the summary SWOT & PESTLE.com report delivered straight to your email inbox for free.
Our insightful and holistic reports have helped corporate,academia and researchers to take their research forward. Like us on Facebook to stay updated with the latest published SWOT & PESTLE Report.

Download Analysis Report




Strengths

1) Huge Production & refining capacity: Saudi Aramco has clocked figures of 10.2 m bpd as well as 11.2 scfd of raw gas in 2015. They have total 134 oil field discoveries with 5 new additions in the year. NGL recovery plant recently opened at Shaybah has capacity to process 2.4 m bpd of associated gas and 275000 bpd of ethane plus NGL. Wasit gas plant which is expected to go on-stream soon is expected to add 1.7 bn scfd of sales gas and 240k bpd of NGL. Midyan gas plant also likely to be on-stream soon non-associated gas to the tune 75 mn scfd and condensate of 4,500 bpd.

2) Huge downstream operations and marketing capabilities: Saudi Aramco has to partner with downstream opportunities to increase in market share and also to achieve economy of scale. It has joint ventures with Sadara chemical company, Total company of France, Sinopec of China, Japan’s Sumitomo, Lanxess of Germany and PT Pertamina from Indonesia for joint ownership and development of various refineries and petrochemical industries and formation of subsidiary companies to micromanage the business issues. Saudi Aramco has wholly owned Jazan Refinery & Terminal intended to drive economic growth of the region and creation of a refinery and associated integrated gasification combined cycle power plant likely to operable by 2018.

3) Pioneering advancement in technology & ecologically sustainable growth: Saudi Aramco focusses on sustainable growth by reducing greenhouse gas emissions, increasing operating efficiencies and increase economic opportunities for the people. They have research offices spread globally at Beijing, Detroit, Houston, Boston and Paris and technology offices in Daejeon, Aberdeen and Delft. Saudi Aramco has been granted a record number of 123 patents in the year 2015. Saudi Aramco has also ventured in health care programs with Johns Hopkins medicine, constructed Shamah Autism center for children, design and development of Shaybah wildlife sanctuary, development of Ras al-Khair Maritime Yard – shipbuilding facility and public energy efficiency programs through installation of LED lights in place of incandescent bulbs.

4) Aramco’s cost per production of a barrel of oil is one of the lowest globally, giving it the advantage in a low price environment: Aramco’s is a highly efficient oil producer with cost of production estimated between US $5-10. This gives the company a leverage in a low price environment where it can continue production without sustaining any losses.

Weakness

1) High dependency of company’s profitability on crude oil sales: Saudi Aramco has produced 3.7 bn barrels in 2015 and exported nearly 2.6 bn barrels globally. However the company has been able to produce only 0.6 bn barrels refined products and NGL production stands at only 0.47 mn barrels in the same year. Thus, Saudi Aramco has to diversify its resources furthermore and intensify its efforts towards production of cleaner fuels to reduce environmental impacts of the energy.

2) Corporate governance and transparency is an issue at Aramco with very few disclosures made by the company: Aramco is completely government owned and there are very few public disclosures made by the company about its operations and financials. It last reported its revenue for the year 2011. The company will need to work on its governance and be more transparent in order that its IPO, which is planned in 2017 is successful.

Opportunities

1) Global economic growth driving consumption of energy and increasing dependency on fuels: According to the World energy outlook published by IEA, global economy is expected to rise at CAGR of 3.5% till 2040 which will proportionately drive the consumption of the fossil fuels and energy derived from them. Global oil consumption is expected to increase by 17% reaching 108mn bpd while natural gas is expected to rise by nearly 47% in 2040 as compared to the current levels of consumption.

2) Saudi Aramco’s IPO will bring out the real valuation of the company and ensure more financial and operational transparency: Aramco’s much awaited IPO is slated to come out in 2017. It will not only help in bringing out the real valuations if the energy giant but will also bring in more transparency and help strengthen the company further.

Threats

1) Decrease in global market share owing to newer exploration capabilities of other countries: There have been huge oil field discoveries and development of domestic refineries’ capabilities worldwide that has led to rising threat of global market share of Saudi Aramco. There have been shale oil discoveries in US the recently being at Texas – Midland basin; oil field discoveries at Sheltland island of Scotland and other discoveries at Russia, Mexico and other various developing countries like India.

2) Continued focus on renewable energy and non-conventional sources of energy: Fossil fuel industry is likely to face stiff competition to the non-conventional sources of energy owing to increased focus of the government on greener technologies to reduce environmental impact and subsidies being provided to the renewable energy establishments. Global investments rose by 5% for hydel power projects while for overall renewable energy sector total investments are more than double at $285.8 bn with respect to allocations of $130 bn in coal, gas and oil field development projects.

Saudi Aramco SWOT analysis has been conducted by Anindhya Sadhu and reviewed by senior analysts from Barakaat Consulting.

References

1. Aramco Annual Review 2015: http://www.saudiaramco.com/content/dam/Publications/annual-review/2015/English/AR-2015-SaudiAramco-English-full.pdf

2. Can Saudi Aramco really be worth $2.5 trillion?: http://www.telegraph.co.uk/business/2016/05/01/saudi-aramco-how-do-you-put-a-price-tag-on-the-worlds-most-impor/

3. UK's ‘largest undeveloped oil field’ discovered off Scottish coast: http://www.cnbc.com/2017/03/27/uks-largest-undeveloped-oil-field-discovered-off-scottish-coast.html

4. Understanding the Stability of Saudi Arabia: https://www.thoughtco.com/how-stable-is-saudi-arabia-2353539

Download Analysis Report




The PESTLE analysis for Saudi Aramco is presented below:
Political
Economical
1. Apprehensions on the stability of the current monarchy1. Saudi economy is highly dependent on oil
2. Oil revenue from Aramco generates steady government revenue
Social
Technological
1. Shortage of local talent affects Aramco
2. Aramco deeply involved in CSR programs which help the local population.
1. Huge cash reserves helps Aramco to continuously focus on innovation and increase efficiency
2. Investments and joint ventures by Aramco in strategic technologies
Legal
Environmental
1. Lawsuits by US under the purview of the Justice Against Sponsors of Terrorism Act (JASTA) Act1. Major investments planned in 2017 in renewable energy sector
Get Your Free Summary Copy of the
SWOT & PESTLE Analysis Report
Get the summary SWOT & PESTLE.com report delivered straight to your email inbox for free.
Our insightful and holistic reports have helped corporate,academia and researchers to take their research forward. Like us on Facebook to stay updated with the latest published SWOT & PESTLE Report.

Download Analysis Report




Political

1. Apprehensions on the stability of the current monarchy: Though Saudi Arabia has been largely immune from the Arab spring, there remains some apprehensions on the stability of the current monarchy which also control Aramco. Mohammed bin Salman, the current crown prince sidelined his cousin Mohammed bin Nayef (the previous crown prince) in an apparent coup in June 2017. Mohammed bin Salman is seen as a modernizer in a kingdom whee citizens are used to enjoying free subsidies. He proposes to transform the government sector through efficiency initiatives and implement austerity measures. If oil prices weaken substantially anytime in the near future, the kingdom might be forced to cut further benefits. This may cause public outrage and the rulers may find themselves in a difficult situation. The stability of the Kingdom is crucial for the future of Saudi Aramco any political tensions may impact the company.

To get the complete detailed PESTLE report on Saudi Aramco please mail us at: support@swotandpestle.com. or contact us here.

Saudi Aramco PESTLE analysis has been conducted by senior analysts from Barakaat Consulting.

Download Analysis Report




Copyrights and Disclaimer

Copyright of Saudi Aramco SWOT and PESTLE Analysis is the property of Barakaat Consulting. Please refer to the Terms and Conditions page for usage guidelines.