Khalid Al-Falih sets out his vision for world's biggest oil company
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In his words: Khalid Al-Falih, president and chief executive officer of Saudi Aramco on the major issues facing the world’s largest oil company
Saudi Aramco has recently capped a multiyear, multi-megaproject drive to take our maximum sustained crude oil production capacity to 12 million barrels per day, which will help us meet the projected call on our crude oil in the decades to come while also maintaining sufficient spare capacity to help ensure market stability—a key objective of the Kingdom’s oil strategy. Saudi Aramco’s activities thus cover the whole globe and span the entire petroleum value chain, from reservoir to petrol pump and petrochemical plant—and everything in between.
But it is important to remember that the company is also the source of most of the revenue of the Kingdom of Saudi Arabia; it is the sole supplier of petroleum energy (the kingdom’s primary competitive advantage), to vital domestic industries, utilities, business enterprises and individual consumers; and an integral part of Saudi society through both our significant contributions to various economic sectors in the Kingdom and our pioneering corporate citizenship programmes and initiatives. Furthermore, our corporate mission statement is crystal clear about the importance of commerciality and profitability in our hydrocarbon operations. In other words, we pay just as much attention to fiscal discipline and our bottom line as any of the multinationals.
Each of these three facets of our company - the international dimension, the domestic sphere and our fiscal discipline - are important, but even more critical is the way each relates to the others, and help to reinforce one another. At Saudi Aramco we have been able to operate along these three dimensions in a balanced manner through a process we’ve termed the “tripod” concept, and ideally we want to pursue opportunities and engage in operations which are compelling from all three perspectives - that is, that help us meet our international responsibilities, benefit our local economy and society, and generate sufficient profit.
A prospective investment which benefits the local economy and society, helps us meet our obligations as a reliable supplier of energy to the world, and is commercially attractive is highly desirable. One such undertaking was the Master Gas System - comprising our gas gathering network, processing plants and pipelines, which was first built in the 1970s and still serves as the backbone of the Saudi industrial sector, while also benefitting international markets by availing barrels of crude that would have gone to meet domestic energy needs, and adding a profitable revenue stream through natural gas liquids exports, where we have been the industry leader over the last three decades. The export-oriented, in-Kingdom refineries we are developing in conjunction with Total and ConocoPhillips are another example of initiatives which meet our tripod criteria.
But how does an organisation like Saudi Aramco develop the requisite organisational capacity in order to meet its commitments in an increasingly complex business, whether upstream, downstream, or in support functions like project management, engineering, logistics and global procurement, or health, safety and environmental stewardship? For this we draw upon a different kind of internal “tripod,” one I will refer to as “The Three Ts.” They are Technology, Talent and Teaming, because let me assure you, as important as our hydrocarbon reserves and our well-developed industrial infrastructure are, they are not enough on their own. In fact these Three Ts are the most significant drivers of our success in the past, and more so in the future in our quest to remain both an industry powerhouse and a very profitable commercial enterprise.
The “T” in technology comes in many shapes, sizes and applications, and the company has come a long way in establishing our technology posture. We have evolved from a firm that relies exclusively on well-proven commercial technologies to one that is actively involved not only in developing our proprietary tools and solutions to our unique challenges, but also in shaping the technology agenda for the industry.
Some of Saudi Aramco’s sophisticated technologies are still purchased straight off the shelf, others have been adapted to our particular needs, some have been created jointly with world-class partners, and still other technologies were developed in-house to respond to our unique conditions and operating environment.
For example, our POWERS reservoir simulator is a proprietary upstream technology designed to model the Ghawar field in a single run and at ever-increasing levels of detail—and it’s unique simply because no one else has fields the size of Ghawar, Safaniya or Shaybah which they need to simulate! A combination of new technologies and techniques also provided valuable leverage when it came to bringing onstream the largest crude oil increment in the history of the industry, the 1.2 million barrel-per-day Khurais Project, which we commissioned at the beginning of the summer.
Upstream, we’re in the vanguard when it comes to the deployment of cutting-edge tools like maximum reservoir contact and extended reach wells, remote geo-steering, and the extensive application of what is commonly referred to as the Intelligent Field or I-Field Concept. We’re also developing new technologies in the area of refining, and a joint project undertaken by our Research & Development Center has resulted in a promising new High Severity-Fluid Catalytic Cracking process. This proprietary technology, which is currently being commercialised, converts low-value heavy gas-oils into higher value light olefins and aromatics feedstocks, suitable for supply to integrated petrochemical processes or for use in the production of high octane gasoline.
But that first “T” means little without the second “T for Talent,” and the ability to tap the minds, harness the abilities, and leverage the skills and experience of our people. For all of our plants and pipelines, the petroleum business still comes down to people and their ability to find innovative and effective solutions to a wide range of challenges—and at Saudi Aramco we view the men and women who call themselves “Aramcons” as our most significant competitive advantage. That is why we maintain one of the most extensive corporate training and development programmes on the planet, encompassing not only traditional training and academic programmes, but also online educational modules, and both structured and informal on-job mentoring.
Whatever the depth of its talent pool, though, no oil company can go it alone, simply because the petroleum business is just too complex and too multifaceted for any single organisation to excel at everything. That is why we have also focused on the third “T for Teaming,” pursuing joint-venture partnerships with leading global petroleum companies and now with top-flight chemical enterprises, and have worked hard to develop strong relationships with our customers in the Kingdom and around the globe. We also look at our dealings with suppliers, vendors, contractors, technology developers and service providers as mutually beneficial long-term partnerships, and expect them to do the same.
It’s true that business is business and we look for the best deal possible on the goods and services we procure. But we also recognise that we need to draw upon the capabilities and expertise of these firms in order to be successful, just as they need our business if they are to thrive.
Our history and experience demonstrates just how much is possible through cooperation and collaboration with complementary organisations—and why teamwork will be even more important as our industry faces new and ever more daunting challenges.