Impact of regulatory requirments in saudi aramco

Sustainability Initiatives According to the annual report of ‘Petroleum Intelligence Weekly,’ Aramco has maintained at the top rank as the leading oil supplier since 1988. Its vast resources make it be dominant in the energy sector in the whole world. Saudi Aramco has completely outdone the United Arab Emirates as a supplier of oil to Japan. The company has established ties with Japan firms in which they have acquired some shares, for example, Saudi Aramco purchased 14. 96% shares in Showa Shell Sekiyu Company in 2004. Importantly, the low cost of production as compared to other oil refining companies is mainly attributed to the free-flowing of oil as a result of pressure from the reservoir hence it does not require the use of pumps for extraction from the ground.

The production cost is estimated at $ 3 per barrel of oil, which is the lowest cost amongst all the world oil companies. The success of the company can also be attributed to a good relationship with the government. There is a clear distinction between the roles of the government and Saudi Aramco administration in influencing the activities of the company. The government decides on the local oil prices, OPEC policy and the level of oil production. Additionally, there is a need for Saudi Aramco to reduce its refining deficit which is much greater as compared to that of competitors. The deficit can be eliminated by investing more on refining which will give a greater amount of refined products. The International Energy Agency predicts that the future demand for oil products will be greater in the next quarter century hence companies like Saudi Aramco are most likely to benefit.

Apart from concentrating on refining, Saudi Aramco is also investing in shipbuilding to facilitate the export of refinery products in larger volumes (Bakhtiari, 2004). Following the joining of Saudi Arabia into the World Trade Organization (WTO) creates a chance for the company to make better sales mostly in petrochemical dealings. The exploration aimed at discovering more gas fields to boost the supply of domestic gas which was in shortage a few years back. For instance, the company discovered the Karan gas field in 2006 which contained high-quality hydrocarbon. The company plans to increase mining of the gas up to 1 billion cubic feet per day. The report from the exploration team indicated that they are in the process of starting mining of more gas in a similar field.

However, the government policy of restricting the exportation of natural gas may interfere with the trade despite the expansion realized (Ediger, 2007). Conclusion The review of the Saudi Aramco company approach indicates that its effort is driven by the will to boost the strengths, take advantage of available opportunities and minimize threats and weaknesses. The execution of the strategies is well planned. Japan seeks to revisit the oil supply association with Saudi Arabia to assert the sources of oil. However, the assortment might be difficult to hound as a result of the distribution of Saudi Aramco oil fields and the earth distance between Saudi Arabia and Japan. There is assurance that Saudi Aramco is going to continue benefiting as the leading oil and petrochemical exporter with the implementation of the highlighted strategies.