Saudi Aramco and it's Effects on Araibian Economy (Research Paper Sample)

Name: Course: College: Tutor: Date: Saudi ARAMCO and its Effect on Arabian Economy Saudi Armco Company is based in Saudi Arabia and deals in activities that are related to the supply of hydro carbon .The Company’s effect on the global market is overwhelming, currently, the company is the largest exporter and producer of crude oil and also the leading company in natural gas liquids exports. It owns an extensive number of refining and distribution networks, in fact it is the sole producer of the fuel used in the country’s industrial sector. The company has formed a substantial number of international business partners in form of subsidiaries and joint ventures (Arab News, 2010). The corporate strategic initiatives of ARAMCO are to transform corporate performance through establishing a solid business unit structure, become the best in the class of oil production and optimize the corporate portfolio through the business and service sectors. The company is keen on capturing any opportunity that comes its way in a bid to increase the profits and protect the future oil markets. This will be achieved by constantly adopting new technological advancement and promoting the use of oil by consumers. The company is concerned with future of its workforce and does all everything possible to create an ever expanding economy in the oil country. In order to maximize the performance of every sector in the company, ARAMCO has developed conducive hierarchical levels that promote teamwork and collaboration within and beyond it. The company has a corporate management that is in charge of the business line and business centre. The corporate management is made up of the president, the general counsel, the executive vice president and senior vice presidents. The executive management mandate is to ensure that the company’s administration is working in accordance with the company’s mission and purpose. The department management works under the executive management in key departments, the division management works under the departmental management whereas the unit management manages a functional unit of a division (Arab News, 2010). Saudi Arabia just like other major oil producing countries has over reliance on the oil production for the running of the economy both in the short and long run. ARAMCO plays a very important role in the in driving the economy of the country. It burns 1.2 million barrels o f oil in a day, has employed a very large number of large numbers of citizens and contributes more than 70% of the GDP. In 2008, the number of very large crude carriers that ARAMCO had stood at 23, these carriers transported more than 1.7 million bpd of crude oil to United States of America, the Mediterranean, and Europe among others (Arab News,2010). The crude oil, refined oil product and natural gas exports in 2008 were as follows. The percentage of crude oil, gas and refined product exports from Saudi Arabia  INCLUDEPICTURE "/cabs/Saudi_Arabia/images/2008%20(2)%20Refined%20Products.gif" \* MERGEFORMATINET 
 Source (Saudi ARAMCO,2008) Locally, more than 600,000 bpd were transported to various locations within the country. Currently the total numbers of VLCC stands at 29 .The Company’s terminal carry more than 3000 tankers on a daily basis. The terminals are situated at Ras Tanura, Jiddar, Ju’aymah, Jaizan, Duba and Yanbu on both the Red Sea Coast and Arabian Gulf Coast. To continue with these trends and even improve in its service delivery and economic building, the company is has formed a number of businesses at the international level (ArabNews, 2010). The New Business Development identifies, receives, evaluates and shapes new business deals that will positively contribute to the growth of the company. For example the joint venture between ARAMCO and a Japanese chemical company is likely to increase the level of industrialization through the creation of new business in the petrochemical sector. The company’s location is strategically placed in areas where it can access the raw material which is fossil fuel. The location of the company subsidiaries plays a big role in cutting down on the level of expenses, transportation cost and for easy accessibility of the raw material. The company is however faced with fears of a declining amount of raw material within its reservoirs and deposits. The graph below shows the worrying oil production statistics in Saudi Arabia  INCLUDEPICTURE "http://2.bp.blogspot.com/_D9-JNTtRKgs/S55RNR-UfHI/AAAAAAAAAjI/0aejdmMvj4g/s400/Picture+730.png" \* MERGEFORMATINET 
 Source (Staniford, Stuart, 2010) The company directors have warned about the likely hood of putting the country’s future in jeopardy by over relying on the oil sector. They have pointed out that the current lucrative prices on the global market should not blind them as the prices keep on changing. On the same note other oil producing countries are rapidly coming up thus increasing the global supply of oil. Economies like Brazil, Venezuela, and Russia among others are producing oil but have paid kin interest on other sectors of the economy and this is proving to boosting the future of these economies (Brundag, 2010). Salim Al-Aydh a senior vice president in the Engineering department has noted the high rate of population increase in Saudi Arabia, on average the oil revenue per capita per person is currently $ 7500 and 30 years ago it was $ 37,000 per person. This has largely been contributed to by the increased level of population and the cyclical situation at the oil market. He also noted that quite a number of countries were inventing other means of energy production such as electricity, and wind. For instance the United States of America is currently the largest producer and consumer of wind energy taking after Germany. The increase in population should come along side more provision of better housing, clean and accessible water sources, more electricity and learning centers for the young population which constitutes of 60 % of the entire population. "With about 60 percent of our population under the age of 20, we have the basic raw material for learning - an abundance of fresh, young minds. I firmly believe that youth - not oil - is the real wealth of Saudi Arabia." (Al Aydh, 2010). He added that the youth were the future energy reserve. Some of the alternative sources of energy and revenue that ARAMCO is considering are the production of hydro electricity and the use of solar energy. The country use a lot of oil in the production of water and hydro electricity ,for instance it uses up to 1.2millions barrels on a daily basis for this purpose .The over consumption can be stopped through the use of other sources of renewable energy. The figure below illustrates the amount of energy consumption in Saudi Arabia  INCLUDEPICTURE "/cabs/Saudi_Arabia/images/Energy%20Consumption%20by%20Type.gif" \* MERGEFORMATINET 
 Saudi Arabia consumes so much energy and it is the leading consumer in the Middle East. Moreover, it only depends on oil and natural gas a situation that should be reversed. Renewable sources of energy would create a more environmentally friendly atmosphere. The country is blessed with sunlight that covers the entire ARAB season all year round. Areas like Rub Al-Khali can be used for solar energy generation that alternatively generate steam that will be run to produce hydroelec...