Khalid Al-Falih, President and CEO of Saudi Aramco, lifts the lid on why the world’s biggest oil company is taking responsibility for its actions.
“We continue to invest all along the petroleum value chain to help improve the global supply-demand balance, on a scale no company has approached in history of our industry”
-Khalid Al-Falih, President and CEO of Saudi Aramco
Earlier this year I was fortunate enough to be in Washington, not far from the steps of the Capitol where some three months ago Barack Obama took the oath of office as the 44th president of the United States. Back in Saudi Arabia, I watched the swearing in ceremony on television, and listened as President Obama struck a thoughtful yet upbeat tone in his inaugural address. Towards the end of that speech he said, and I quote, “What is required of us now is a new era of responsibility.” It struck me – because responsibility is a theme that we have been stressing within Saudi Aramco for many years. Of course, the president was speaking of the need for accountability in many areas of contemporary life, and he was speaking from a uniquely American perspective. Yet I believe that such a call to take greater responsibility, and to think in terms of providing long-term benefits for the many rather than selfishly reaping short-term gains, applies equally to each and every one of us in the corporate world. And of course that includes the global petroleum industry and all those who influence it, from technicians, engineers and researchers, to educators, investors and policymakers. I am a firm believer that whatever role we play when it comes to energy, each of us needs to assume responsibility for the actions and impacts of our own company or institution, and to ensure that we are able to reliably meet the needs of our various stakeholders – and when it comes to petroleum, everyone is a stakeholder.
For the men and women of Saudi Aramco, taking responsibility means, first and foremost, a commitment to ensuring that our company remains the most reliable supplier of energy to the world. But it is also something more – it is a shared sense of obligation to our stakeholders that transcends the traditional measures of success in our industry like billions of barrels of reserves or millions of barrels of daily production. It is a commitment to be socially responsible, wherever we do business; to be a creator of opportunity for our people; an innovator of new technologies; a steward of safety and the environment; and a propagator of knowledge. This is Saudi Aramco’s vision. It is deeply rooted in our heritage, and it defines who we are and what we strive to be. To that end, I remind our oil field operators and maintenance technicians in the middle of the Empty Quarter, the staff along our cross-country pipelines and at our marine shipping terminals, and in fact all of our 55,000 employees that what they do impacts men, women and children in cities, towns and villages throughout the world – places they have never been to, will never see, and may never have heard of. Not long ago I was in Houston for a meeting of Saudi Aramco’s Board of Directors, which again confirmed its commitment to our ongoing slate of projects and programmes. Those initiatives are many and they are massive, and in many ways these ongoing activities and new ventures are fundamentally transforming Saudi Aramco by expanding its business portfolio and enhancing its operational capabilities. But even as they pave the way for greater success in an ever more complex future, these plans also enable us to sustain a reputation, which goes back to the earliest days of our enterprise. If you talk to any of my Saudi Aramco colleagues, you will find that they derive their greatest satisfaction not from being the biggest producer and exporter of crude oil, but from being the most reliable supplier of petroleum on the planet. In other words, they take pride in taking responsibility for the role we play in providing energy to the world, day in and day out, year after year, without fail.
Supply and demand
First and foremost, we continue to invest all along the petroleum value chain to help improve the global supply-demand balance, on a scale no company has approached in the history of our industry. From the subsurface reservoir all the way through to the gasoline pump and petrochemical plants, we are working hard and partnering with others to ensure that an ample supply of petroleum is available to consumers around the world, and to power economic recovery, social development and greater prosperity in both industrialised and developing nations. To that end, we are sustaining our crude oil and natural gas exploration efforts, including exploration in new frontier areas both on land and offshore. Just a few weeks from now we will attain our goal of putting in place a 12 million-barrel-per-day crude oil production capacity, once we complete our Khurais oil field programme. This massive project, the largest single crude oil increment ever commissioned, will be capable of producing as much oil as the entire state of Texas. But Khurais is only part of the story, since Saudi Aramco will account for more than half of the grassroots crude oil production capacity brought onstream worldwide during the current decade. And although historically we’ve been known primarily as a major producer of crude oil, we are also constructing additional refining capacity both in the Kingdom and abroad, including in the United States. In fact, Saudi Aramco is behind one out of every three barrels of firm commitments to new refinery capacity to be built between now and the year 2015. Elsewhere downstream, we are moving forward with integrated refining and petrochemical ventures with some of the world’s leading chemical companies, including the Dow Chemical Company. These new facilities not only add value to the Kingdom’s hydrocarbon production, but form the hubs of new industrial clusters, help to develop and diversify the Saudi economy, and create new career opportunities for our nation’s youth. Major investments such as these allow us to play a central role in helping to meet the world’s demand for energy and constitute what I consider, taking charge by taking responsibility.
The long-term view
But some people ask us why we continue with these projects even in a challenging business environment and at a time when oil consumption has fallen for two consecutive years, for the first time in 25 years. Certainly we are well aware of the state of the global economy, and have felt the impact of the present downturn along with the rest of the petroleum industry. But we are investing throughout the business cycle and are consistent with our long-term focus. We know that as the global economy rebounds, demand for petroleum will also grow – and in the absence of such investments, the world is likely to face another vicious cycle of price spikes. In some ways, such a responsible approach is simply Saudi Aramco’s destiny, given the massive resource base we manage and the expansive petroleum infrastructure we operate and maintain – but it is a duty we take very, very seriously indeed. At the same time, our infrastructure development projects and programmes are coupled with investments in advanced technology and applied research. By harnessing innovation, leveraging our company’s intellectual capacity, and deploying brain power and not simply horsepower, these research and engineering programmes are enhancing our ability to find, manage and produce the vital hydrocarbons so essential to modern life. Furthermore, the company is helping to spearhead the development of a bold new institution dedicated to postgraduate technical education and cutting-edge research: the King Abdullah University for Science and Technology (KAUST), which will open its doors this September. Built on the Kingdom’s Red Sea coast, KAUST will be an international, graduate research university – designed to inspire a new age of scientific achievement and knowledge creation in Saudi Arabia, the Middle East region, and indeed the world. Among other areas of endeavour, KAUST will be home to one of the world’s leading solar energy research centres focused on making solar energy more efficient, more economical and more scalable, and is also working with IBM to create a new supercomputer which will be one of the most powerful computing systems in the world. And while KAUST will provide tremendous benefits to the Kingdom, it is actually designed to positively impact the entire global community. For example, one of its research programmes will focus on salt-tolerant crops – not because we face food shortages in the Kingdom, but because other nations will need to plant more crops to nourish their growing populations. It will educate international students – not because we lack qualified Saudi applicants, but because KAUST wants to be the nexus of the best and brightest men and women from many different national and cultural backgrounds. And the university will devote considerable efforts and resources to developing solar energy technologies, not because we lack energy resources in the Kingdom – which already boasts the world’s largest reserves of crude oil – but because we believe the world will need contributions from all technically, economically and environmentally viable sources in order to meet growing global energy demand in the decades to come.
At Saudi Aramco, as part of our responsibility to help meet the world’s energy demand and to do so as cleanly as possible, we also hold ourselves accountable when it comes to the issue of environmental stewardship. This commitment is nothing new – the company’s first environmental policy statement dates back to 1963, well before green causes became mainstream. Today, we not only work to minimise the environmental impact of our operations, but are also pursuing research related to the desulfurisation of crude oils, carbon capture and storage, and cleaner burning fuel formulations designed for the next generation of engine technologies, all of which will help to lighten the environmental footprint of petroleum consumption. Saudi Aramco is also heavily engaged in environmental outreach programmes – especially targeting the Kingdom’s young people – in order to raise popular awareness of environmental issues and encourage people to recycle and conserve water and energy. We also view the “soft side” of our business, and indeed of our world, with a sense of responsibility. All too often the media carries self-fulfilling prophecies about an inevitable “clash of civilisations” which pits one society against others in a zero-sum competition. Yet Saudi Aramco’s own experience demonstrates that cross-cultural cooperation and understanding are not only possible, but in fact help to secure greater prosperity for all concerned. In fact, many observers have noted that Saudi Aramco over the years has become a model of multicultural collaboration and exchange, at both an institutional and an individual level. Those positive experiences are now being channelled into the King Abdulaziz Centre for Knowledge and Culture, a world-class learning, cultural and arts center which Saudi Aramco is building near our headquarters in Dhahran. In addition to the exciting new educational and cultural opportunities it will provide to all members of our local communities, its online offerings will serve a global constituency wishing to learn more about the Kingdom’s rich culture, its contemporary society and its prospects for the future. Aside from encouraging cross-cultural exchange and dialogue, the centre will also stress our common humanity and shared aspirations and hopes for the future. That’s something else we know first-hand, because from the Saudi and American pioneers of the 1930s to today’s workforce of 70 different nationalities, those who call themselves “Aramcons” have always been united by a sense of purpose, and a shared sense of responsibility. But I also firmly believe that our dedicated men and women constitute an even more important source of competitive advantage, and will ultimately sustain Saudi Aramco’s success in a new knowledge age. Therefore, we hold ourselves responsible for the development of our people, and for providing them with opportunities to enhance and utilise their competencies and capabilities. The participants in the Saudi Aramco Management Development Seminar, a programme which is now more than a quarter-century old, are among our best and brightest emerging leaders, and therefore this programme plays an important role in helping us sharpen our competitive edge as a company exposing these men and women to new perspectives and fresh viewpoints.