On 14 July 2020, the Saudi Arabian Oil Company announced the reorganisation of its downstream business to support and enhance integration across the hydrocarbon value chain and better position the company to drive financial performance, value creation and global growth.
The company’s Downstream operating model will include four commercial business units: Fuels (includes Refining, Trading, Retail and Lubes); Chemicals; Power; and Pipelines, Distribution and Terminals.
These business units will be supported by three corporate functions: Manufacturing, Strategy and Marketing, and Affiliates Affairs.
Aramco outlined that the reorganisation is designed to enhance the effectiveness and efficiency of its existing Downstream assets, but does not represent a fundamental change in the overall business structure.
Abdulaziz M. Al Gudaimi, Senior Vice President of Aramco Downstream, said the new operating model will help streamline the operations and reinforce the company’s position as a major global energy and petrochemicals player.
“This reorganisation is yet another step in Aramco’s strategy to develop a global integrated Downstream business that enhances our competitiveness by maximising our value capture across the hydrocarbon value chain.”
The company noted that the reorganisation, which is expected to be in place by the end of the year, further strengthens its industry leadership in safety, sustainability, efficiency and reliability.
Indrajit Sen, Oil and Gas Editor at MEED, part of GlobalData, said the decision comes as the oil company’s refining margins are hit by lower demand as a result of the COVID-19 pandemic.
“At the same time, petrochemicals demand is being knocked by the virus’ impact and there is worldwide clamor against the environmental ill-effects of plastics.”
“However, it also comes amid an aggressive expansion of Aramco’s downstream activities that saw the company complete its $69.1bn acquisition of petrochemical producer Saudi Basic Industries Corporation (SABIC) in June,” Sen detailed.
“The world’s biggest company aims to double its downstream output by 2030, increasing overall refined output from around 5.4 million barrels a day (b/d) currently to 8-10 million b/d, and petrochemicals production from 16.8 million tonnes a year (t/y) to 34 million t/y, excluding SABIC. With the completion of the SABIC acquisition, Aramco’s petrochemicals business now has a total production of about 90 million t/y.”
“Following the restructuring, we can expect to see Aramco making a global drive to accelerate its work towards achieving its 2030 objectives,” Sen concluded.