Saudi Aramco is a major refiner of crude oil and possesses five wholly-owned and two joint venture refineries at strategic locations throughout the Kingdom, which meet both domestic and export requirements.

The company invests heavily in its refining facilities to ensure that they meet the needs of a competitive international refining market, as well as efficiently supplying the Kingdom and its economy with vital products.

The refining and distribution sector is a dynamic one, where change is driven by new technologies, new product specifications and tighter environmental regulations.

At home, Saudi Arabia is witnessing a sharp increase in demand for refined product, thanks to the country's fast-growing population and flourishing industrial sector.

Saudi Aramco is certainly no stranger to the development and implementation of new technologies which help streamline its operations and enhance the environment.

Indeed, the company invests significant amounts on its assets to help preserve the environment.

Technip-Coflexip was recently awarded, for example, a lumpsum turnkey contract worth up to $100 million for the design and construction of a sulphur plant at Riyadh Refinery.

Work on the project began earlier this year and will, according to Technip-Coflexip, be completed by April 2004.

Saudi Aramco also phased out the use of leaded petrol in the Kingdom at the beginning of last year, replacing it with a 95 RON unleaded gasoline grade, one year ahead of a Gulf Cooperation Council (GCC) deadline.

To diversify gasoline consumption, Saudi Aramco is also planning to introduce 91 RON unleaded gasoline to the local market by 2005 to diversify gasoline consumption. To this end, Saudi Aramco will upgrade its refining and distribution facilities to produce the 91 and 95 RON unleaded grades.

The company's laboratories pioneer the innovative technologies which make Saudi Aramco the leading Middle East refiner and one of the largest in the world. These Research & Development laboratories are now said to be considering technologies to enhance product specifications, including the reduction of sulphur and aromatic content and the use of various fuel additives.

The company's facilities - including refineries, bulk plants, terminals, delivery systems and electrical networks - have been highly automated, while state-of-the-art monitoring capabilities using real-time data points are, according to Saudi Aramco, positioned throughout the refining and distribution system.

An SAP Hydrocarbon Management System was rolled out in the year 2000 to provide a company-wide integrated approach to sales logistics, logistics planning, production inventory movement, internal and external procurement and external accounting.

Saudi Aramco's involvement in refining began in the 1940s when it established a 50,000 barrels per day (bpd) refinery at Ras Tanura, though the company's widespread move into refining did not begin until much later.

Today, the company's refining capacity is approximately 1.8 million bpd. The refining and distribution network is also expected to be expanded to meet demand and new specifications in years to come. As a result, new bulk plants may be necessary to improve the Kingdom-wide distribution of products, as well as the installation of pipeline systems to optimise product delivery methods.

Saudi Aramco has also adapted its operations to meet global market requirements by acquiring overseas refining assets.

The company has invested heavily in plant and distribution networks in the US, Europe and Asia Pacific regions, becoming a partner in development and providing uninterrupted supplies of crude oil to remote refineries.

These overseas assets represent an additional source of income for the company, providing reliable markets for its crude and helping cushion itself from the potentially damaging effects of fluctuating crude oil prices, which affect vital upstream earnings.

Saudi Arabia's overseas refining policy was forged in the mid-1980s, when it was decided to refine half of the Kingdom's crude in its own system, while establishing secure export outlets.

Today, Saudi Aramco has successful joint venture refining assets in the US (Motiva Enterprises), South Korea (S-Oil Corporation), the Philippines (Petron Corporation) and Greece (Motor Oil (Hellas)).

Houston-based Saudi Refining Inc. (SRI) and Shell Oil Company (Shell) announced earlier this year that they had completed the acquisition of Texaco Inc.'s interests in Equilon Enterprises LLC (Equilon) and Motiva Enterprises. SRI now owns 50 per cent of Motiva while Shell owns the other 50 per cent of Motiva and 100 per cent of Equilon.

SRI is a subsidiary of Aramco Services Company, headquartered in Houston. In addition to managing its joint venture investments, SRI sells approximately 550,000 bpd of crude to Motiva, which has a refining capacity of 825,000 bpd.

In South Korea, S-Oil's Onsan refinery - in which Saudi Aramco holds a 35 per cent stake - continues to outperform its rivals. In the Philippines, high value product sales and a general stabilisation of the Philippine economy has helped improve profitability of the Petron Corporation.

Motor Oil (Hellas), in which Saudi Aramco holds a 41.9 per cent interest, improved gross margins last year thanks to efficiencies stemming from a refinery upgrade in the year 2000, which was undertaken to meet more stringent EU fuel quality standards.

In order to meet the challenges of the future, Saudi Aramco says it is now working to integrate its domestic as well as international (joint venture) refining and distribution operations to meet the needs of globalisation.