Saudi Aramco

Saudi Aramco

The world’s most valuable company may not be Apple Inc. That crown could instead belong to Aramco, as Saudi Arabian Oil Co. is better known. The sprawling state-owned producer, sitting atop one-fifth of the globe’s petroleum reserves, pumps more crude than the top four publicly traded oil companies combined. Crown Prince Mohammed bin Salman, the Saudi king’s influential son, says the company is worth in excess of $2 trillion, roughly double the size of Apple. A much-vaunted plan to sell shares of Aramco in 2018 got postponed, raising speculation that it might be dropped altogether, but Prince Mohammed insists that the biggest initial public offering “in human history” will go ahead.

The Situation

Aramco has hired numerous banks to work on its second push for the IPO, which could be held as soon as November, according to people familiar with the situation. The energy giant is pressing ahead with the share sale even after a drone and missile attack on its facilities in September disabled 5% of global supply. The kingdom’s original plan, announced in 2016, was to sell up to 5 percent of Aramco, either on the Saudi bourse and one or two overseas exchanges, or solely on the domestic exchange. That got pushed back to allow Aramco time to fund and complete the purchase of a $69 billion stake in Saudi Arabia’s biggest petrochemical company. Global investors had also balked at the valuation, with some banks pricing a 5 percent stake at $50 billion to $75 billion — way short of the $100 billion-plus foreseen by the Crown Prince. Even so, the lowest valuation would still dwarf the world record for an IPO of $25 billion by Alibaba Group Holding Ltd. The aim of the offering is to create a war chest and prepare the country for the post-hydrocarbon age.

The Background

Explorers from the Rockefeller family’s Standard Oil empire first struck oil in Saudi Arabia in 1938. The venture became known as Arabian American Oil and went on to discover the Ghawar field, still the world’s largest onshore deposit. In 1980, the Saudi government bought out the original shareholders, all of them forebears of Exxon Mobil Corp. or Chevron Corp., and renamed the company. Aramco has fueled decades of prosperity for Saudi Arabia, a conservative Islamic state and one of the world’s last remaining absolute monarchies. It generates almost 90 percent of the government’s income and built the refineries, petrochemical plants and other infrastructure that form the backbone of the world’s 17th-biggest economy. Saudi Arabia has been the de facto leader of the Organization of Petroleum Exporting Countries, or OPEC, since the cartel was founded in 1960. It’s often been called the “swing producer” because decisions to increase or trim Saudi output drive the price of oil. Saudi crude accounts for about 1 out of every 9 barrels of global production and can be extracted for about a third of the cost of reserves in the U.S. Over the decades, Saudi Arabia has had a hand in engineering periods of lower oil prices in a bid to maintain its share of global energy markets.

Compensation Plans

Base salary

It is your fixed base salary paid on a monthly or hourly basis. It does not include any extra allowances or compensation related to your job or work location.

The base salary is based on an industry standard. They regularly participate in salary surveys to ensure our salary structures are competitive with other leading oil, gas and petrochemical companies.

Housing allowance

They offer a housing allowance to eligible Saudi Riyal employees in lieu of providing company housing. This allowance is accrued and earned for each completed month on the payroll from July 1 to June 30. It is equal to three months’ base salary with minimum of 30,000SR, a portion of which is earned each month you are employed throughout the year. The allowance is normally paid in December.

Saudi Aramco Incentive Plan (SAIP)

This is a company-wide variable pay plan for employees, with individual incentive payouts varying based on a combination of corporate and individual performance.

Ramadan Bonus

The Ramadan bonus payment is equivalent to one month’s base salary and is paid annually during the holy month of Ramadan.

Settling in allowance

A one-time settling in allowance is offered to assist newly hired employees with the unexpected expenses of relocating for work. Single employees receive 60% of one month base salary, married employees get one month base salary.

Other types of compensation

In addition to the compensation components described above, an employee's annual compensation may also include:

Specified location allowance: They operate in various locations throughout Saudi Arabia. If you’re assigned to work at a remote location, you’ll receive an allowance that will be paid on a monthly basis.

Overtime/shift premium: If you’re assigned to a location or function that requires scheduled overtime or non-standard work hours, additional compensation will be paid on a monthly basis.

Performance Management

Performance management in Saudi Aramco is an essential tool for a conducive working environment. Performance management is aimed at improving performance and consequently increasing productivity in a working environment. The three primary communication areas that are necessary to enhance performance management are goals, performance evaluation, assessing and rewarding performances. There are three main contact areas in Saudi Arabian Oil Company. Project managers have a big role to play in promoting effective management. Firstly, a manager needs to make the goals and objective of the Saudi Aramco company clear to all employees. Also, it is crucial for managers to engage the employee in setting the proposed goals of Saudi Arabian Oil Company. Involving the employees in goal setting, promotes employee better understanding of their roles and responsibilities, each employee has to achieve the set goals. Secondly, all employees in Saudi Aramco are given a review based on their performances. These objectives, the proper management of employee performance is crucial. Managing the performance of employee can be accomplished by using a cycle of events. These activities include planning, checking and reviewing.

•The planning process is mainly conducted by the managers, shareholder, and the owner of the Al Marai Company. The overall objectives and a plan to achieve the set objectives are identified.

•The set goals and objectives are later discussed in a meeting so as to ensure the employees understand their roles, duties and obligation of the company. Coaching and training of employees are also applied where necessary.

•Reviewing is conducted at the end of the performance period, and the employee performance is evaluated against the set objective. The means and behaviors used to achieve the set Al Marai goals and objectives are also discussed. Additionally, a new set of objectives is set for the next performance period.