Saudi Aramco SWOT & PESTLE Analysis
COMPANY PROFILE -Saudi Aramco (أرامكو السعودية)
Business Sector :Oil & Gas
Operating Geography :Middle East, Saudi Arabia, Global
About Saudi Aramco (أرامكو السعودية) :
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.Saudi Aramco (أرامكو السعودية) Revenue :
USD 3559 Billion (FY ending March 2018)Competitive Analysis of Saudi Aramco (أرامكو السعودية)
| 1. Huge Production & refining capacity 2. High downstream operations and marketing capabilities 3. Pioneering advancement in technology & ecologically sustainable growth 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 | 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 |
| 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 3. War and terrorism in the Middle East region leading to drone attack on Aramco |
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Detailed SWOT Analysis of Saudi Aramco (أرامكو السعودية)
Strength
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Weakness
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Opportunity
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Threat
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 hydro power projects while for overall renewable energy sector total investments are more than double the amount at $285.8 bn with respect to allocations of $130 bn in coal, gas and oil field development projects.
3. War and terrorism in the Middle East region leading to drone attack on Aramco: The Middle East region has been embroiled in several wars in recent times which has made the region unstable and also led to increased terrorism. The Syrian war led to the emergence of the Islamic State. Saudi Arabia also has major animosity against Iran. The war in Yemen which is continuing as of 2019 and Saudi Arabia has been one of the major aggressors in the war against the Yemeni Houthis. One of the major repercussions of the above was felt in September 2019 when Houthi’s claimed to have attacked Aramco’s Abqaiq and Khurais facilities which caused extensive damage and knocked off over 50% of its production. Increased tensions may lead to an all-out war in the region with Iran which may majorly impact Saudi Aramco.
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TABLE OF CONTENTS
DELIVERY AND FORMAT
WHY CHOOSE US?
References used in Saudi Aramco (أرامكو السعودية) Analysis Report
1. Saudi Aramco H1 2019 Half Report - https://www.saudiaramco.com/-/media/publications/corporate-reports/saudi-aramco-h1-2019-half-yearly-report-english.pdf?la=en&hash=1C305066A4A712137399DC1B2A395E71D14FB807
2. Saudi Aramco Who We Are - https://www.saudiaramco.com/en/who-we-are/overview
3. Saudi Aramco Company Profile - https://www.bloomberg.com/profile/company/131861Z:AB
4. Saudi Aramco Revenues 2019 - https://www.saudiaramco.com/en/news-media/news/2019/saudi-aramco-reports-first-half-2019-net-income
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Saudi Aramco SWOT and PESTLE analysis has been conducted by Anindhya Sadhu and reviewed by senior analysts from Barakaat Consulting.
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