Online Exclusive: Saudi Aramco's downstream transformation
‘The Transformation of Downstream’
Dhahran, Saudi Arabia, February 18, 2021 – “We are standing on the shoulders of giants,” said Mohammed Y. Al Qahtani, Senior Vice President of Downstream, Saudi Aramco, during the launch of the Downstream business’ Transformation Program and new operating model.
Attending virtually from across the Kingdom and the globe, members of Downstream’s extended leadership team were taken through the key aspects of the program. “This transformation is absolutely needed if we are to face the challenges of the future,” Al Qahtani said. “Our aspirations are huge.”
After a video that took attendees through the sheer scale of Downstream, Al Qahtani highlighted his own deep connection to the business, and that he felt he was coming home after decades in the upstream side of the organization. He recollected that he had been brought up in the shadow of Ras Tanura, which his father managed as part of a 36 yr career with Saudi Aramco.
Securing maximum value
Al Qahtani emphasized that Downstream and all its people need to ensure that it operates as a truly international, integrated business. “It is imperative that we get maximum value from our huge investments,” he said “and this program and operating model is how we will do so. The possibility of our hydrocarbons extend way beyond raw energy, and as one of the largest integrated downstream businesses on earth, we must squeeze every bit of value out of each molecule. This will take collective action from all of us.”
Transformation Built on Four Pillars
The Transformation Program is built on the foundation of four key pillars:
- Operational excellence
- A commercial mindset and technological advancement
- Portfolio optimization and growth
- SABIC integration.
To achieve this, the program emphasizes that it is essential that the business has a laser-like focus on the execution of its plans. Every asset needs to be examined through the lens of an investor. With governance at the center, all assets will be assisted to deliver bottom line growth through a fit-for-purpose operating model and a sharpened performance culture.
Al Qahtani noted that the company has more than 20 mega-assets across the globe, and although there will be capital constraints during the next few years, the company can do tremendous things with its diverse and global portfolio. “The SABIC integration, for example, offers a multi-billion dollar opportunity in portfolio optimization, on a recurring, annual basis,” he said.
New Positions and Oversight
To support the transformation, a Transformation Oversight Committee has been created led by Al Qahtani and Downstream executive members.
The Transformation Program consists of three key phases, with the third phase occupying the center stage:
- Establishing the full potential of the business using an investor due diligence approach
- Developing asset level transformation plans and enablers fully owned by line leaders
- Executing the transformation plans to deliver sustainable value.
With the transformation driven across the entire business line, Al Qahtani highlighted that every employee has a role to play, and all Downstream employees will have opportunities to impact the segment’s bottom line, creating tremendous opportunities for personal development and growth. A supporting communication plan will be rolled out over the coming weeks to empower the entire team.
The Transformation Program’s focus is Downstream’s competitiveness, particularly in financial performance, ways of working, and capabilities.
Deliverables under these three focus areas are:
- Radically improve operating results
- Margin growth
- Improved cost structure
- A more agile and value focused operating model
- Driving best practices
- Empowered staff
- Exciting development opportunities
- Improved decision-making.
“Across short and long-term plans that prioritize returns and cash flows, Downstream will deliver more value and earn the right to grow,” said Al Qahtani. In the short term, this includes optimizing the full potential of transformation in Downstream’s assets; delivering an uplift in performance; capturing and maximizing value and synergies in SABIC; and expanding the trading business.
In the long term, the program includes upgrading assets’ complexity, placing significantly more crude into chemicals by 2030, and with integrated retail and lubricants, monetize the company’s brand.
Comments