Saudi Aramco Empowers AI and Big Data Unit to Boost Profitability and Expansion

Yasser Mufti, Aramco's Executive Vice President for Products and Customers, disclosed that they currently have 70 professionals dedicated to this initiative and are actively expanding their team.

Saudi Arabian oil giant Aramco is intensifying its efforts to leverage big data and artificial intelligence to enhance profitability, facilitating decisions spanning from trading strategies to acquisitions, according to a senior executive in an interview with Reuters.

Yasser Mufti, Aramco’s Executive Vice President for Products and Customers, disclosed that they currently have 70 professionals dedicated to this initiative and are actively expanding their team.

This move provides a rare glimpse into the inner workings of Aramco.

Historically, such endeavors were primarily associated with international oil companies.

However, Aramco established the unit, known as Global Optimizer, as a department within its downstream business in 2022, as part of a comprehensive overhaul initiated by the state-owned oil giant in 2021.

Aramco’s overarching objective with this revamp is to ensure that its investments align more effectively with the vast scope of its operations and enable the company to respond more swiftly to market fluctuations.

Concurrently, the company is conducting asset-specific evaluations to enhance its returns.

Mufti also indicated that Aramco is actively exploring potential deals, including the recent acquisition of a stake in the retail business Gas & Oil Pakistan, and is considering investments in Asian refineries.

However, he did not divulge further details about these opportunities.

In line with this strategic shift, Aramco is in discussions regarding acquiring a stake in Shandong Yulong Petrochemical, which follows a series of investments in Chinese refineries.

Additionally, Aramco has taken steps to enter the gas sector by acquiring a stake in liquefied natural gas company MidOcean Energy and listing shares of its base oil unit Luberef. More share sales are reportedly in the pipeline.

Consultancy firm Oliver Wyman, which provided advisory services for this project, estimates that advanced commercial models like the Global Optimizer can potentially generate an additional $1.5 to $2 per barrel in earnings before interest and taxes (EBIT) compared to conventional models.

Traditional models typically yield between $4 and $7 of downstream earnings per barrel of oil for major oil companies.

Mufti emphasized that Aramco has built substantial capacity for optimization, risk management, and trading, and with high-quality assets and a commercial mindset, they aim to exceed these estimates. Saudi Arabia, as the world’s leading oil exporter, heavily relies on Aramco’s profitability.

Analysts predict Aramco’s net profit for 2023 to be $121.9 billion, down from $161.1 billion in the previous year, partly due to fluctuations in crude oil prices.

Mufti stressed the challenge of sustaining the highest possible recurring EBIT while noting that some refineries have already maximized their earnings potential through the Global Optimizer, while others still have room for growth.

Notably, the enhanced profitability will not only benefit Aramco but also its joint venture partners and shareholders.

Nadim Haddad, Partner and Head of Oil and Gas for India, the Middle East, and Africa at Oliver Wyman, emphasized that Aramco’s scale and diverse activities make optimizing its system a compelling strategy for assessing opportunities and creating value.