The Petrochemical Industry – Sabic and Aramco

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Introduction of SABIC and ARAMCO companies

SABIC is an abbreviation which stands for Saudi Basic Industries Corporation. It was founded in 1976 by Royal Decree. It has risen over time as identified where it has changed small fishing villages into modern industrial cities. The output of the company has been high and it has been increasing over all the years without any issues which could have resulted in a decline. It’s the biggest unrestricted company in Saudi Arabia. SABIC is listed in Tawadul. It is also the leading oil firm on the global level. It has the largest crude oil reserves and manufacturing. The government’s stake in the company is seventy percent.

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The company headquarters is in Dhahran, Saudi Arabia. SABIC had been identified as ARAMCO since 1933 to 1988. This stands for Arabian American Oil Company. However SABIC annual production of crude oil is estimated to be 3.43 billion barrels. It controls more than 100 oil and gas grounds in Saudi Arabia. Its manufacturing set of connections in Saudi Arabia consists of 18 associates. This makes the company to be popular worldwide. It has several branches in different countries globally. SABIC also possesses various oil fields. These branches are manage differently but must report to the headquarters. This company has increased its operations and increased its market share within a very short period of time throughout the universe. It makes a large amount of returns which has enabled the company be the one of the main key drivers of the world economy. It gives a great share of tax to their country. SABIC provides various employment opportunities in Saudi Arabia and more than forty countries around the world. It is estimated to have above 30,000 employees in its manufacturing and compounding plants besides 3,000 people employed in Europe who work in SABIC’s manufacturing sites.

SABIC has 2 manufacturing spots in Geleen in the Netherlands and Gelsenkirchen in Germany. The purchase of those companies in other parts of the world signifies the intention of SABIC in expansion and becoming a true globally recognized company. Over the period of 2004 the SABIC shares was listed in the stock market. An increasing rate of return for the company has been witnessed over the past years. This is due to the effectiveness of the company’s team members. The company is topping so far in the Middle East. It is the most dominating company in the world market. It has been rated to be one of the top 20 companies in the world.

The company focuses mostly on the production of thermoplastics. It produces polyethene to a larger percentage than fertilizers and other thermoplastics. It also manufactures fertilizers, glycols and other thermoplastics. In 2007 SABIC recorded a profit of US $7.2 billion. This is approximately 32% rise from the previous year. The company is established as a world manufacturer and the global supplier. This is a great achievement to the company and a source of motivation to even strive higher. In the year 2006 SABIC continued in its expansion plans and established a company that issued Islamic bonds. The company was named SABIC Sukuk Company. It was estimated to cost a range of USD267 million and USD800 million. The company established its head offices in the UK which gave the company a strategic and competitive base.

Saudi Aramco was started its operations in 1933. This is during the time when the government of Saudi entered into a binding partnership with the standard oil of California. The agreement was to consent to the company to search Saudi Arabia for oil. The company however did not succeed in drilling oil hence they purchased a 50% stake of the California-Arabian standard oil company. The drilling lasted for four years and the first success was located in seventh drill site in Dammam. These findings however gave hope to the company to continue with work. The company was previously an American company. When it was taken over by Saudi Arabia it was changed to ARAMCO. However America has a great number of shares in the company. This is therefore a form of foreign investment by the US. This is because they get a share of the annual profits from the company. In 1950 King Abdul Aziz in Saudi Arabia made threats to take into the public sector his country oil facilities which made Aramco to agree to share profits in a fraction of a half. However the American government awarded US Aramco affiliate companies a levee break in order to replace the profits being given to Saudi Arabian company. The country’s government also has a lot of shares in the company. This contributes a significant amount of money to the government. This is how several governments in the world earn their revenues. They invest internally and externally. They are then sure of yearly revenues from their fixed share of returns. The company has undergone several analysis and ratings. It has been evaluated the leading distributor of crude oil. Several infrastructures were constructed following the progress of this company. These included roads, rails, and schools for the staff of the company. Company hospitals also came up. This gathered the health needs of their employees. This also improved the reception of this company in the world market.

What the companies does

After the exit of American companies, Saudi Aramco began doing tasks previously done by those American companies in the region. The company task is exploration in the region and giving contracts to other companies in the region. The majority of employees in the company were geologists and geophysicists. They have been dealing with the work of discovery since 1982. This has been going on in the EXPEC. However Saudi Aramco utilized the much faster and efficient computers in their productions. This includes the Cray supercomputers. This has been replaced by Linux clusters after it was decommissioned.

Drilling new wells is the most crucial process by Saudi Aramco Company. It needed a lot of workforce and the company had to invest heavily on that project. A large number of engineers were employed in order to perform the tasks adequately. The company needed to spread out more to counter the high demand of oil. To enable the company to meet the market demands, they had to increase the number of engineers and geo-scientist. The company has received many awards from several parts of the world. These are best performance awards. This is because of its valuable and proficient operations. It delivers products within the stipulated time. Saudi Aramco has established a system of reprocessing the oil and channeling it to various places where there is need. There is an arrangement where the transportation of the oil and crude oil is done to various countries globally. The company has established a subsidiary. This has given the identity of VIM ltd. which dispatches oil to various parts of the world such as the North America.

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SABIC has been involved in various researches in order to develop in the skill of production of oil. It has employed various researchers, engineers and scientists who are focused on different features of the hydrocarbon production. SABIC have two main streams. There is a stream which is responsible for exploration and production named upstream. The downstream is responsible for bio-researches. The company has been in a position of initiating various techniques in the discoveries which will take the company to a competitive level. The company however achieves something by establishing its discoveries in the market and on the techniques of production. The studies on exploration however are kept in libraries to further references and to be used in studies in future. The wells that were not successfully yielding any results in the findings are called dry holes. This provides valuable information on sedimentary rocks which are far away on ground. Exploration requires people who are qualified in order to succeed.

SABIC has covered three other locations which they are in partnerships. There are products which the company produces such as the methanol and polyethene. There are also the ethylene glycol and MTBE. Its producers are Saudi iron and steel company based in Al-jubil. SABIC manufactures chemicals through seven components: chemicals, performance chemicals, fertilizers, metals, innovative plastics, manufacturing and polymers. This includes polyolefin, PVC and polyester.

Saudi Aramco takes very good care of their employees. It upholds a large health facility. The company also gives the health insurance to its workers. There are various fire stations. They are mainly for industrial and residential to avert any danger in case the fire broke out. It also has an industrial security firm. The security force is in charge for providing safety measures to company’s business and housing areas. The company also provides transport to its employees who travel all over the kingdom for company’s business. The company has a large number of fleets which have ensured that the company is operate well. The employees are given opportunities to study oversees depending on one’s payroll. They also provide good learning opportunities to those who are not good financially. The dependents also benefits from the educational programs and their travelling costs are covered by the company.

SABIC has occupation developments plans. These are headed by the department of career development. This department enables people who want to further their studies to advanced level. People who want to gain more knowledge on education would be given that opportunity. Fresh graduates are enabled to advance to masters and PHDs studies. The company also has a good pension plan for the employees when they retire. The types of rewards which the company issues to the employees is very attractive and worth having it. They are tailored in such a way that there is attainment of new markets and that the same markets are maintained by the company.

The employees who have worked for longer time are testimony of fine packages. These opportunities which are offered by this company to the people in Saudi Arabia and the world at large. The rewards include workers getting a base salary. They are also provided with an over base payments. These provide incentive to accept and remain on the given assignments. They also provide overtime allowances for those who work on additional time and are added to the monthly basis. On matters of environment Saudi Aramco is trying its best to conserve the environment and keep it clean. The company gave a report which indicated that the company was in a process of decreasing the utilization of the gasoline and that it has put into use such a policy. This has led the company to minimizing the amount of sulfur which is being released.

Products of the two companies

ARAMCO produce crude oil. The company manages up to 260 barrels of oil. This accounts for 25% of all the oil used globally. It also manages very big gas reserves, which is the leading globally. The company has one of the leading tankers globally. It has the biggest crude oil reserves. This crude oil is refined and used for different purposes in our lives. It is used to fuel engines of vehicles which we use in our day to day life as the most common mode of transport. It also makes kerosene. Kerosene is used to fly aeroplanes which are the most convenient long distance transportation. Kerosene as fuel used in lighting of several homes in most of the developing countries. Oil is used as a lubricating agent in almost all the machinery. This helps in several production industries.

While SABIC is the leading producer of polyethene and polypropylene, it also manufactures fertilizers, glycols and other thermoplastics. These products are distributed all over the world and are used globally. These thermoplastics are widely used in the universe. Polyethene bags are mainly used for packaging especially in supermarkets. These plastics are unavoidable and we often come across them. They are also used to make green houses for doing several growing of plants. Fertilizers are also used in agriculture to increase production of several crops. These products are therefore used in different companies. They are also useful in that the vendors who sell these products make profit and earn a living. These companies therefore are very important across the world.

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Importance of the companies in Saudi Arabia and the world

ARAMCO is the main contributor to the current economic status in Saudi Arabia. However the country’s economy is still considered to be developing. The oil production has made the country wealthy. The country is facing some international competition. The company mainly depends on foreign labour because of diverse culture and languages. The company has to employ people of different nationalities and religion for its smooth running. SABIC has also build up its international presence. This therefore earns the country a lot of revenue from exporting the products of these two companies. Both companies provide employment worldwide. SABIC employs nearly 33 thousand employees across the globe.

ARAMCO have staff capacity of 55 thousand people. These have greatly boosted the economic status of Saudi Arabia. Aramco employs so many engineers in the country for drilling the wells used as oil reserves. This therefore this gives a great percentage of Saudi Arabian population an opportunity to work for this leading company. SABIC also offers opportunities for researchers and engineers to take care of its technical machineries. Researchers work very hard to discover new business opportunities and strategies to be implemented. It also gives job opportunities to different types of consultants in the country. These consultants are normally marketers and economists. They look at the current situation for the company and guide the management on different decisions to be made for efficient running of the companies.

Both ARAMCO and SABIC companies are major determinants of world’s economy today. They are both leading companies in Saudi Arabia and the world at large. Because of the cultural diversities of the markets they venture in, the companies employ their staff worldwide. This is done in order to reach the target market and meet the needs of different people. Communication is a major aspect in every business. Therefore people from different linguistic background are needed for the prosperity of the business. This will greatly affect the market of their products. Customers should be reached and communicated to in the best language they understand.

Communication is a key feature in the digital market. Effective communication enhances the profitability of ARAMCO and SABIC. Therefore, it is the responsibility of marketers to ensure that there is good communication to customers. Cultural awareness is very important in achieving effective and efficient communication. In order to reach the target markets for example in the Middle East, marketers should be able to understand their cultural and linguistic diversities. Linguistic matters are crucial in international marketing. To reach a particular targeted group, their language and cultural practices should be put into consideration. Cross cultural and linguistic consultancy is therefore an important aspect. There should be a plan in order to adapt the content of many languages and diverse cultural practices according to the individual needs in the market. International companies carrying out their operations in the Middle East should engage their marketers in the cross cultural and linguistic consultancy.

The team experts of these two companies should do a requirement analysis in terms of culture and languages for the targeted market. This therefore creates a job opportunity for the team experts e.g. researchers and economist. This requirement analysis involves gathering of the linguistic needs of the people in different parts of the world which make up the target market for these companies. The main languages of communication should be identified. Then the marketers are put in a training process to ensure they have the necessary language skills to communicate to the targeted audiences. This is very crucial in that customers need to have clear understanding of the products they are about to purchase. They need to get a detailed description of different products and services. This is only possible through a clear mastery of the different languages. The cultural matters of the people living in the Middle East and other parts of the world are also important to be considered.

The marketers must adopt the culture of the targeted audience in order to get a positive reception. People have various views and assumptions associated to other cultures other than their culture. Learning and displaying their culture will therefore enhance their acceptance to the marketers. These cultural practices include the way of dressing, eating habits and taboos. In order to win a particular targeted group their cultural practices should be observed. Marketers should be able to dress like the aimed audience in order to win the customers. For example in an Islamic country marketers should dress in the Muslim wears in order to be accepted. The marketers employed to do this marketing careers are paid well hence improving the world economy.

ARAMCO and SABIC companies increase the foreign investments. This will bring many investors to the country. It will also bring necessary funds required for the large projects in the country. With the prosperity of the businesses, it will lead to attraction of foreign investors. Since the transport will be improved in the country, many people from around the globe would have interests in doing their businesses in the country. This is because the transport for raw materials will be faster hence improving production. The delivering of finished products will also be made fast and reliable. The communication in the country will also be greatly improved and this will raise the country’s economy. There will be improvement of general infrastructure in the country. Since these companies are very much concerned in distribution of their products, they tend to venture in improving the means of transport. The broad and railway lines will be improved. These companies are also an enormous source of revenue to the country. This is because they pay large amount of taxes to the Saudi Arabian government. The tax levied to the companies is used by the country to undertake several projects in order to improve the economy of the country. These companies transport their products through the sea and hence they improve the shipping sector of almost all the countries. They pay taxes to this sector for using the sea transportation.

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Similarities and differences of ARAMCO and SABIC

SABIC is ranked number 5 globally of all the petrochemicals company. The company is part of the world’s leading companies. It’s positioned number five globally in the petrochemical industry. It dominates the world market currently. It is the leading producer of polyethene, polypropylene. It also manufactures fertilizers, glycols and other thermoplastics. In 2007 SABIC recorded a profit of US $7.2 billion. Which was approximately 32% rise from the previous year. It was at this period that the company was declared as the global manufacturer. This was a great achievement for the company and gave it motivation to even strive higher. It covers around 45 countries. It uses hydrocarbon gases in order to produce these polymers. It is a global company and employs people from anywhere in the universe. It has approximately 31,000 staff around the world. It has engaged itself in partnership with other companies. These companies are for example; ExxonMobil, Shell and even Mitsubishi chemicals.

SABIC is also rated the lowest cost producers. The main objective of the company is to produce high quality products while minimizing cost. The natural gas by product is used to produce energy. This greatly saves the energy used by the company. Other sectors also use this energy to power their operations. This greatly saves on the cost incurred in production. The natural gas produced as the by product is less or not pollutant to the environment. This makes the company to be recognised as a conserver of the environment. The success of SABIC is based on three major factors. The company has several established local partnerships within Saudi Arabia. This enables it to penetrate the market so fast and gather as many ideas as possible.

Another factor is that the company conducts the best research regarding its production and reception in the markets. It has several research bodies around 46 of them. This helps the company gather several views of its customers and their requirements. It also helps to gather views of the strategic management from other companies in the research findings. This will enable the company to improve its productions. This is possible since the researches are in to discover new and best methods of productions which should be employed in order to increase production and profitability.

Market research greatly helps to discover the several cultural and linguistic requirements of different countries around the world. In order to gain momentum in the world market, language and cultural issues should be considered. Market research also helps the company discover the market strategies to be put in place in order to dominate the world hence increasing its productivity. The third factor is technology programs. Technology is improving continuously. In order to keep abreast with these technological advancements SABIC ensures that they go by the technology in order to increase productivity and market penetration. SABIC has its own website called www.sabic.com. This helps the company to reach as many people as possible. It also improves the several branches of SABIC. The company can market their product through the internet and enables any person or company to do online shopping from their website. SABIC believe in their ethical commitments. They strive to meet the needs of every ethical group.

ARAMCO on the other hand is actually the largest oil company in the world. It has the biggest crude oil reserves. Its production is also the largest. ARAMCO operates in the most famous one hydrocarbon network. It strives to perform the works that were previously done by American companies in Saudi Arabia. It maintains an independent environment. This is achieved by performing crucial tasks on their own. It however gives contracts to other companies to take care of secondary tasks. It performs exploration, production and distribution of their products. The company also ships and markets the petroleum products. They do international supplies of oil products. They transport around 10 tankers per day overseas. It has the world largest fleets of crude oil carriers. They do work to conserve the environment.

They supply oil operations with the necessary safety measures to ensure they do not cause environmental pollution. They mainly focus on pollution free operations. This is because the products are very pollutant to the environment unlike the SABIC by products. There are laws which have been enacted on these types of companies to ensure they keep the environment safe. In case of any spillage of oil to the sea while under shipping will cause a lot of harm to the water life. Oil is the major pollutant to the sea since it blocks the surface of the water cutting off the oxygen which supports life for those creatures living in the sea. This company is committed to providing reliable energy. Every part of the world needs a consistent supply of energy in order to prosper continuously. This makes the economic development of the world as economic as possible.

ARAMCO Company manages up to 260 barrels of oil. This is equitable to 25% of what is being produced in the globally. It has the leading gas reserves globally. This helps in the transportation of its oil. In 2007 it production of crude oil hit 3.3 billion barrels of oil. This company is a worldwide employer. It employs people across the globe giving opportunities to potential population in the petroleum industry in the world. It has total of around 55,000 people worldwide. This number of staff is relatively larger to the number of staff (33,000) employed by SABIC company. Drillings many wells for the purpose of oil reserve made the company to recruit many engineers. It distributes 9.1 million barrels of oil on daily basis. This is a very great percent of the world total oil. Initially the company was not aimed to refine oil. But the laws of Saudi Arabia wanted only one company to deal with oil operations. This made the company to purify and distribute its produced oil in the whole nation.

The SABIC Company also conducts several researches in the petrochemical industry. This is done in order to enhance the company’s productivity. This is possible because the scientists are able to find out new techniques of doing production in order to deliver quality products to the market. This is done because of the increasing world demand for their products. The research also helps the marketers in how they should approach the market in order to be successful and maintain their current global position. ARAMCO therefore operates a larger global market scale as compared to SABIC Company. The company has a very competitive strategic management team which makes the company’s core decisions. They cooperate with other managers from top companies to share several ideas. This enables the company to maintain its top position in the world market.

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