Jubail University College

Department of Business Administration

Semester 421

Course Name Microeconomics

Course Code BUS 151

Course Section

Student ID Student Name

 ARAMCO OVERVIEW

It is an integrated global company that was nationalized in 1988, with its

headquarters located in Dhahran. It is the Return Energy Corporation in the Kingdom of
Saudi Arabia. It ranks first among oil companies worldwide in terms of crude oil reserves
and exports. In 1980, the Saudi government increased its interest in Aramco to 100%.
Eight years later, the Saudi Arabian Oil Company (Saudi Aramco) was formally
established - a new company that assumed all of Aramco's responsibilities, and His
Excellency Ali Al-Nuaimi became the company's first Saudi president in 1984, and the
first Saudi president and CEO in 1988. By the early 2000s, to achieve the company's
vision of becoming the world leader in energy and chemicals, it continued to diversify
further. Saudi Aramco has expanded its presence worldwide to include the three major
global energy markets; In Asia, Europe and North America. In April 2019, Aramco signed
a deal to buy a 13% stake in South Korean oil refinery company Hyundai Oil bank for $
1.24 billion. Moreover, on April 11, 2019, Aramco signed an agreement with Poland's
leading oil refiner PKN Orlin to supply it with Arab crude oil. The company has a strong
global presence as it exists and has agreements with many countries, and this provides it
 at the local and global level and the presence of specialists to do research and produce
products in line with the achievement of its goals. Whereas, the company expects, during
the next decade, to continue making major investments in exploration and production
operations, strengthening its distinguished position in the field of oil, and maintaining its
maximum sustainable production capacity. The Saudi Arabian Oil Company (Aramco)
announced its financial results for the third quarter of 2020. These results highlight the
company's financial and operational strength, despite market volatility and the impact of
COVID-19 on a global economy. Aramco continues to demonstrate its strength and
resilience across economic cycles, and is weathering challenging market conditions to
record a net income of $ 11.8 billion and free cash flow * of $ 12.4 billion in the third
quarter of 2020, and Aramco announced a dividend of $ 18.75 billion for the quarter.
Third, $ 6.4 billion, Aramco continues to implement capital spending and efficiency
.improvement programs in response to the current business environment

The company provides various services to all its employees working in the
:local community and those working with it

It deals with several high-tech hospitals that provide health insurance to its *
employees all over the Kingdom and the world

It owns firefighting stations in both industrial and residential areas *

It provides its employees with various recreational facilities such as golf, *

movie theaters, bowling, and event buildings and other services

It owns and operates a fleet of 17 aircraft, 21 helicopters and two airports in *

the United States, and it has aviation facilities in five airports in the Kingdom
of Saudi Arabia, in order to transfer its employees between the company's
various operations and offices. Represented all over the world

?What is the market sector of the chosen monopoly

Saudi Aramco belongs to the private sector and it was previously a limited
joint stock company, but recently it has changed to become a joint stock
.company owned by the Saudi government
 ?Why does the chosen monopoly arise

Aramco is a global Saudi company that has branches and subsidiaries in

many powerful countries of the world and has the highest oil exports in the
world because it is owned by Saudi Arabia, which has the highest oil reserves
in the world. The only one specialized in its field and because of its strength
with developed countries, and it is supported by the government. Also,
through the many ways the company has taken to deliver value from a barrel
of oil - including non-metallic products, crude products to chemicals, the
company has gone beyond the traditional markets and uses of oil and gas
while also investing in new and modern technological solutions to achieve
cleaner and more efficient oil production and consumption, This includes
enhancing the efficiency and sustainability of transportation by using new
.high-performance engines and fuels, making them distinctive and unique

?What are the positive effects of the chosen

Aramco has a special position and great interest by the Saudi people, as it is
the backbone of the Saudi economy, and it has been known for decades for its
accuracy and profitability, which makes it like a golden check, and they
consider it the most reliable investment, given its importance and position
locally and globally. When the company is alone, it makes many initiatives
and social donations, as well as environmental, health, education, and others
:such as

Saudi Aramco joined the World Bank’s initiative to reduce gas flaring to *
zero by 2030. The company announced that it will burn less than 1 percent of
its total crude gas production in the first half of 2019

Provide the opportunity to complete education for its employees, send *

scholarships abroad, and build and maintain model schools for all educational
levels
Establish protocols to monitor and limit the spread of COVID-19, including *
medical support and financial donations

The company launched a "Device Donation Initiative" to help thousands of *

students access virtual education. It donated thousands of new devices to
underprivileged students and encouraged staff to donate the computers used
to support the campaigns

What are the ethical implications for monopoly?

Monopoly is that the company is the only one that provides this service, for
example the giant Aramco company, this negatively affects some areas in
:terms of

Determining prices: The company knows that the demand is great and *
global, so it can impose the prices it wants and the policies that it wants
because it is aware that I am the only one who provides them with the service
.and they have no alternative

Inflation: Monopolies create inflation. Since they can set any prices they *

.want, they will raise costs for consumers. It's called cost-push inflation

Do you think monopoles are good? Why?

Sometimes the monopoly is important, necessary, and good for the economic
process, and this is found in large companies that individuals cannot establish
similar to (Aramco), This is because individuals, like the government, cannot
run a giant company like this and reach agreements with other countries
because it may also affect politically. One of the policies or problems with it
may lead to political problems with major countries and then disasters, so it is
good that it monopolizes the government and diversifies its services to
.provide the whole world has all the oil it needs

:THE ARTICLE

The Saudi Arabian Oil Company (“Aramco” or “the Company”) today announced
its financial results for the third quarter of 2020. These results highlight the
 Company’s financial and operational strength, despite market volatility and the
.impact of COVID-19 on the global economy

 :Commenting on the results, Aramco President & CEO Amin H. Nasser, said

We saw early signs of a recovery in the third quarter due to improved economic“
activity, despite the headwinds facing global energy markets. Meanwhile, we
maintained our commitment to shareholder value by declaring a dividend of
.$18.75 billion for the third quarter

Aramco’s integration with SABIC is proceeding as planned. Our resilience is “

supported by our unique scale, low upstream carbon intensity and low production
costs. As the global economic and social landscape evolves, these strengths and
our continued drive to lower GHG emissions mean we are well positioned to
.support the energy needs of the global economic recovery

We continue to adopt a disciplined and flexible approach to capital allocation in“

the face of market volatility. We are confident in Aramco’s ability to manage
.through these challenging times and deliver on our objectives

We are making progress on multiple fronts, including the world’s first blue“
ammonia shipment for zero-carbon power generation in Japan – further
strengthening our focus on new and innovative solutions that contribute to the
”.global energy transition

Financial Highlights Aramco continues to demonstrate its strength and resilience

across economic cycles, navigating challenging market conditions to record net
income of $11.8 billion and free cash flow* of $12.4 billion in the third quarter of
.2020

.Aramco declared a dividend of $18.75 billion for the quarter

Q3 capital expenditure was $6.4 billion and Aramco continues to execute capital
spending optimization and efficiency programs in response to the current business
.environment
 Operational Highlights
Total hydrocarbon production for the first nine months of 2020 was 12.4 million
barrels per day of oil equivalent, of which 9.2 million barrels per day was crude
.oil

The Company delivered crude and other products with 100% reliability in the
third quarter of 2020, continuing its strong track record of supply reliability.
Aramco achieved a record historic single-day natural gas production of 10.7 bcc'd
.on August 6, 2020 from both conventional and unconventional fields

Successful exploration activities resulted in two successful unconventional field

discoveries in the third quarter, both in the northern part of the Kingdom; one
.field with both oil and gas reservoirs and another field with a gas reservoir

The Company’s Khurais oil facility was recognized by the World Economic
Forum as a leader in the adoption and integration of cutting-edge technologies of
the Fourth Industrial Revolution (4IR), including artificial intelligence and
industrial robotics. Khurais became Aramco’s second facility to join WEF’s
Global Lighthouse Network – a select group of just 54 facilities worldwide that
.have shown leadership in 4IR technologies

The Downstream business continues to focus on enhancing integration and

creating growth opportunities across the hydrocarbon value chain. Following the
successful close of the SABIC transaction, the third quarter of 2020 marks the
first full quarter in which SABIC’s financials are incorporated into Aramco’s
Downstream results. Integration with SABIC continues to progress and drives
forward the Downstream strategy of creating value through integration across the
hydrocarbon value chain. Aramco continued to demonstrate its focus on
sustainability with the world’s first cargo of high-grade blue ammonia, which was
shipped from Saudi Arabia to Japan for use in zero-carbon power generation. The
process – a collaboration between Aramco, SABIC and the Institute of Energy
Economics, Japan - involved the capturing of 50 tons of associated carbon dioxide
.(CO2) emissions for use in methanol production and enhanced oil recovery
 COVID-19 Update
Aramco remains committed to the safety of its people, establishing protocols to
monitor and limit the spread of COVID-19 including medical support and
 .monetary donations
The Company launched a “Device Donation Initiative” to help thousands of
students’ access virtual schooling. It donated thousands of new devices for
underprivileged students and encouraged employees to donate used computers to
.support the campaign

REFERANCES

Aramco announces third quarter 2020 results, Nov2020, Aramco announces

third quarter 2020 results | Saudi Aramco