Thread regarding Saudi Aramco layoffs

Aramco not going to 13 mb/d. Was it really a choice?

If you haven't been keeping up with the news, the Saudi Government has directed Riyad not to increase potential to 13 million barrels / day of oil. With oil prices around $70/bbl, you might reason that it does not make economic sense. However, I never saw nor heard of a case where Aramco management let bad economics stop them from doing anything. Riyad seems to regard oil production capacity as a gauge of influence, so the more the better. Rather, I think the recent move has more to do with the deterioration of Aramco contractors combined with the deterioration of the competence of Aramco itself. If I am right, eventually you will see Aramco doing JVs or issuing concessions to other oil companies to explore and develop energy resources inside the Kingdom. Aramco will payout the promote from these deals as a one time dividend to help pay for Neom or whatever other projects Riyad has in mind. At some point, Aramco will be reduced to its core competencies: signing agreements, cashing distribution checks and producing power point slides. The first deal might well be in an area where the company lacks experience, such as deep water, but deals that eat into Aramco's core operations will soon follow with all the associated layoffs. The Saudi's won't deal exclusively with America this time, the Saudi rock will be divided up between everybody, including the Chinese, in the hopes of playing one country against another. Aramco's current CEO has been eagerly bending to Riyad's will, but he doesn't have any real deal experience. I think a new CEO, probably someone from inside Aramco with deal experience, will be moved into the CEO spot to get this done. I expect this to take place as soon as the current King passes, if not sooner. Mark my words.

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| 918 views | | 9 replies (last February 19)
Post ID: @OP+1qW8p66d

9 replies (most recent on top)

The defensive responses are typical of local Aramco attitudes. Making a valid counterpoint requires an ounce of independent thought, much easier to sneer, backstab or dismember.The irony is these kind of expats are actually trying to help. It will all end in tears sooner or later. Get that bag ready.

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Post ID: @duhd+1qW8p66d

Wow, 20 down votes. Looks like this post really struck a nerve with the locals. They think Saudi would never allow foreign operators to drill. The same "they" that thought Aramco would never be a public company. Well, Aramco is public, its just that nobody outside the Magic Kingdom will touch it. So, if you can't pi-p the stock, you need to pi-p the rock!

# Aramco - Pi-p The Rock

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Post ID: @czbm+1qW8p66d

Aramco currently pays Expats about the same amount as it did 10 years ago, all other things being equal. That's about 30% less in real terms, not including the benefit cuts, higher Expat fees, etc. This greatly changes the pool of actual Expat employee candidates that it has access to. However, Aramco management seems to have deluded itself into thinking that it deserves the same people it was getting ten years ago. This actually makes the situation even worse, because the company wastes everybody's time handing out low ball offers that just get turned down.

My old division is a classic case of this. Every Expat but one left at the start of the pandemic. Management decided to try to staff the department with Saudis which they brought in to train. While this was happening, they filled in the hole with Expats from other areas and made a few low ball offers to good Expat candidates during 2021. It turned out that Saudi's didn't actually want the work the division was doing, because it was complex and difficult, yet was never respected nor rewarded by management. So, now management was still stuck using Expats from other areas, and no new Expats were coming because all the 2021 low ball offers were turned down. Management then made more low ball offers to slightly less well qualified Expat candidates during 2022. Again, nobody came. By this time, other areas were having their own issues with staffing and could no longer help out the division. Management tried to do without work from this division and discovered that it could not. Therefore, in 2023 management panicked and made somewhat richer offers to anyone with a background that suggested that they might be able to do the job. In late 2023, management did get a few Expats to join the department, but my contacts tell me that the new hires are not working out. I am guessing that the new crew will not be at Aramco long.

I'm pretty sure that stories like this one are common across Aramco. There are essential jobs that are not getting done because management is either too incompetent or too corrupt to understand who is doing real work and who is not. Locals don't want anything to do with these jobs, as they are hard, with real consequences if done wrong, and they offer no real career path (management). The default answer seems to be to hire cheap Expat labor, but that doesn't seem to be working either. How could Aramco possibly move forward in any capacity under circumstances like these?

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Post ID: @9dfd+1qW8p66d

All money needs to go to Neom projects during next five years, expect further reductions and savings campaigns. Check Youtube for updates of Neom and you will surprised by the magnitude and the spending pace.

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Post ID: @9mvq+1qW8p66d

The Saudi government will sell the idea of foreign energy concessions the same way that it sells everything else. With power point presentations at the Ritz Carton in Riyadh. And if you still don't understand, the nice people at Blackwater will be more than happy to explain it to you.

www.theguardian.com/world/2020/nov/19/saudi-accounts-emerge-of-ritz-carlton-night-of-the-beating

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Post ID: @4ycm+1qW8p66d

Still claiming reserves north of 275 billion barrels?

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Post ID: @3gog+1qW8p66d

As an Expat, you are often caught between groups of Saudis with different agendas. Who wins or loses sometimes determines who get laid off and who doesn't. The ship is sinking and the crew is fighting over who gets the planks.

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Post ID: @1vld+1qW8p66d

I don't really think E&D activity can be hidden inside a service contract. Aramco contractors already seem to do more than the typical amount of hand holding, but no service provider can be effective when it is beholden to the Aramco chain of command. Any effective E&D effort would need to have an independent management and fiscal structure, and that means an outside operator. This will be a hard sell to many inside the Saudi power structure, but it is either go that route or live with steadily declining production volumes. The Aramco that I see today is far less capable than it was 10 years ago when, at a time, the technical complexity of its operations is increasing. Something has to give. There is a divide within Aramco management as far as what to do, you can call it the "deal makers" vs the "operators". In downstream, the deal makers have made inroads, but in upstream the operators still run the show. While neither the deal makers nor the operators have been very successful, for Riyad it is a matter of choosing the best of a bad lot. That's why I think the deal makers are coming to upstream even if it upsets certain members of Aramco's management. FWIW, I think the current CEO is in the operator camp, and that is why he will need to go if Aramco does move in the deal maker direction.

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Post ID: @1dcv+1qW8p66d

Agreed, It’s already happening with the downstream business, dozens of JVs have been formed, many of which with Chinese entities. Only a matter of time before the same happens in upstream, they’ve already sold the pipelines off to black rock! Local management are making a fortune in rake offs.

The increase to 13 a day was always a push, unconventional resources may be the route to perform such but that will require actual expertise. This is just perfect for yet another shady JV. Saudis won’t like to admit they can’t do this themselves, so it will be hidden via external contracts and arms length entities - the IKTVA score will always go up, everyone will be happy!

Only fly in ointment is the continued fire sale, also known as the IPO. Such carve outs will eventually hit market capitalisation andwill devalue Aramco stock, I guess they’ve not thought that far ahead yet!

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Post ID: @pps+1qW8p66d

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