Aramco Pumping Oil at Fraction of Rivals' Costs

Aramco Pumping Oil at Fraction of Rivals' Costs
The government-owned producer is extracting crude for less than half the costs of its nearest rival.

(Bloomberg) -- Saudi Aramco can pump oil at a fraction of the cost of rivals and extracts more from beneath the Arabian Peninsula’s deserts and seas than the output of the five biggest international producers combined, helping clinch its spot as the world’s most profitable company.

The government-owned producer in Saudi Arabia extracts crude for $2.80 a barrel, less than half the costs of nearest rival Equinor ASA of Norway and a fifth of Exxon Mobil Corp.’s. The information comes from the prospectus for Saudi Aramco’s debut dollar bond and a person with knowledge of a presentation to investors.

Key Insights

The abundance of cheap crude makes for a raft of superlatives: crude production that’s exceeded 10 million barrels a day on average every year since 2015 makes it the world’s largest oil producing company; profit of $111 billion last year exceeds that of the world’s biggest companies. Aramco’s low cost of production creates world-beating profit but cash flow lags rivals Aramco is seeking to expand refining capacity and chemical production to better balance its business and sustain profit when oil prices slide. Company’s 3.1 million barrels a day of net refining capacity make it world’s fourth-largest integrated refiner. Capacity will rise to 3.7 million barrels a day when two plants start later this year.

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Aramco pumped 10.3 million barrels of crude a day in 2018. Total liquids production of 11.6 million barrels a day last year was more than 20 percent greater than the combined production of Exxon, Chevron Corp., Total SA, Royal Dutch Shell Plc. and BP Plc. Aramco’s also its own power utility: the company plans to nearly double electricity generating capacity to 12.2 gigawatts by 2020 from 6.54 gigawatts now.

--With assistance from Archana Narayanan and Netty Ismail.To contact the reporter on this story: Anthony DiPaola in Dubai at To contact the editors responsible for this story: Nayla Razzouk at Rakteem Katakey


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Rudolf Huber  |  April 02, 2019
Maybe, anyone looking at Saudi Aramco should take its statements with a boatload of salt. We know that EOR (Enhanced Oil recovery) is a big issue in SA, and we also know that they pump prodigious amounts of seawater into oilfields in order to lift more oil. I am not an upstream man but I understand enough to know that this artificial lifting is not on the cheap side. Somehow cashes with the 2,8 USD. And also knowing that some of the biggest fields in SA are also some of the oldest producing fields on Earth, I have a hard time believing this figure. But to each his own - we all must decide on what we take for real and what might be hyped a bit (lot).