Aramco Trading - Where Trade Flourishes...the approval of Saudi Aramco’s Board of Directors as...

Aramco Trading Annual Report 2019Where Trade Flourishes

Where Trade Flourishes

Aramco Trading

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table of contents

Board of Directors

Our Journey

Products Portfolio

Operations

Message from theChairman

Timeline

Storage, Blending and Hubs

Corporate Governance

Message from theCEO

Our Values

Virtual Refinery System

Human Resources

Our Business

Our Offices

Chartering

Safety

Aramco Trading Annual Report 2019


Mr. Mohammad Al Mulhim is the Manager of the Oil Supply Planning & Scheduling Department at Saudi Aramco from 2017 and previously held a range of leadership roles at the Company. Mr. Al Mulhim joined Saudi Aramco in 1984 and is currently a board member at Aramco Trading Company.

He is a graduate of King Fahd University of Petroleum & Minerals with a Bachelor’s Degree in Chemical Engineering and has a Master’s Degree from Oregon State University in Chemical Engineering.

Mr. Al Hareky was appointed Controller for Saudi Aramco by the Board of Directors in August 2018, where he had previously been serving as Group Treasurer since May 2015. He joined Saudi Aramco in December 1989, where until 2011, he worked primarily within the Internal Auditing and Treasury functions of the Company, with assignments in Corporate Finance, Investment Management, and Treasury Services. In addition to his roles within Saudi Aramco, Al-Hareky has also represented the Company on several boards, including Vela International Marine Limited, the Red Sea Refining Company (now YASREF), Saudi Arabian Industrial Investment Company (Dussar), and Gard P & I Limited. He currently serves on the board of Saudi Aramco Total Refining & Petrochemical Company (SATORP), S-Oil Corporation, Aramco Trading Company, Wisayah Investment Management Company, and Sadara Chemical Company.

Al Hareky holds a Bachelor of Science Degree in Accounting, and an MBA from King Fahad University of Petroleum & Minerals (KFUPM).

Al Hareky has completed a number of executive leadership programs since joining Saudi Aramco, including a Special Finance Program at Indiana University, the Harvard General Management Executive Program, and the Economics of Oil Program in London.

Salah Al-HarekyBoard Member

Mr. Alkhunaini has assumed the role of Crude Oil Sales & Marketing Manager and concurrently sits on Aramco Trading’s Board of Directors.

Mr. Alkhunaini joined Saudi Aramco in 1989. In 2010, he was then appointed as Senior Marketing Manager at Saudi Petroleum International in New York, managing the sales and marketing activities of Saudi Aramco’s crude oil in North America. In 2012, he was appointed as the Representative Director of Aramco Asia Japan, leading it to consolidate Aramco’s presence in Japan and increasing the Company’s profile. Ahmed was a board member of Showa Shell Sekiyu K.K. Oil Company and a board member of Saudi Aramco Base Oil Company – Luberef.

He is a graduate of King Fahd University of Petroleum & Minerals with a Bachelor’s Degree in Industrial Engineering.

Ahmed AlkhunainiBoard Member

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Mohammed Al-MulhimBoard Member

board of directors

Mr. Al Gudaimi is the Chairman of the Board for the Aramco Trading Company (ATC), Motiva Enterprise LLC (Motiva), and Rabigh Refining & Petrochemical Company (Petro Rabigh). He is the shareholder representative of the Saudi Aramco Total Refining & Petrochemical Company (SATORP) and the Saudi Electricity Company (SEC) Boards. Mr. Al Gudaimi is the Senior Vice President of Downstream at Saudi Aramco. Before that, Mr. Al Gudaimi held

Mr. Al Buainain has been the President & CEO of Aramco Trading since being appointed in 2016. Mr. Al Buainain had previously been the global head of Transaction Development in New Business Development, charged with executing joint ventures, mergers, and acquisition divestitures, as well as other transactions. Mr. Al Buainain was the CEO of Saudi Aramco Energy Ventures, as well as the

Abdulaziz Al-Gudaimi Chairman of the Board

Ibrahim Al-BuainainCEO & Board Member

similar leadership positions with Corporate Planning, Chemicals, and New Business Development.

Mr. Al Gudaimi has a Bachelor’s Degree in Petroleum Engineering from King Fahad University of Petroleum & Minerals. He obtained an MBA from the Massachusetts Institute of Technology’s Sloan School of Management in 2001.

President & CEO of Aramco Asia, which supports Saudi Aramco’s corporate strategic objectives in the Asia-Pacific Region.

Mr. Al Buainain holds a Bachelor’s Degree in Mechanical Engineering from King Fahad University of Petroleum & Minerals, MBA in Global Management, and a Master’s Degree in Innovation and Global Leadership from the Massachusetts Institute of Technology (MIT).



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Aramco Trading provided continuous support to the JVs during and after startups, assisted their products market penetration and expansion, and sourced alternative feedstocks when required.

“ “I would like to extend my gratitude to the entire Aramco Trading family for another successful year filled with great achievements and unprecedented results. Also, I would like to extend my appreciation to all business partners for their commitment and support.

Despite a very challenging microeconomic and geopolitical environment, together, we were able to overcome all challenges, meet all our commitments to our stakeholders, and sustain our position as the most reliable, resilient, efficient, and global optimizer of all Saudi Aramco Downstream assets. This year witnessed transformation of our business model from a head quarter centric to global heads model, which required revamping processes, upgrading systems and networks while maintaining security, controls, and regulatory compliance.

Aramco Trading remained committed to supporting the domestic system and exerted significant efforts to keep it balanced. For our international assets, Aramco Trading provided continuous support to the JVs during and after startups, assisted their products market penetration and expansion, and sourced alternative feedstocks when required.

In terms of market presence, the company continued growing. ATC expanded its geographical outreach by increasing market share in the existing markets in addition to penetrating new markets such as Indonesia, Nigeria, Morocco, Italy, Poland, Vietnam, Sri Lanka, and Australia. Storage and blending activities continued to grow by commissioning two storage facilities in Ain Sokhna and Seddi Karier, in addition to leasing an additional storage facility in Pengerang, Malaysia. This will enable the company to optimize logistics, customize qualities, capture market opportunities, and create additional value.

As for our product portfolio, crude trading has witnessed a historical growth this year. The Company signed processing deals with 4 major refiners in Europe and the Mediterranean. Third party crude trading increased significantly as we became the major supplier of third-party crude to Saudi Aramco International assets. In addition, LNG desk was established in Singapore and started trading in April 2019.

Aramco Trading’s management exerted constant efforts to energize and develop employees, and encourage them towards achieving their career goals. The company established a number of initiatives in order to achieve its development goals.

Indeed, we are proud of all the achievements and yet need to be prepared for new challenges in 2020. Saudi Aramco Downstream is growing in scale and diversification. As a result, Aramco Trading will continue growing in parallel, while maintaining its support to the system and ensuring efficient placement of the products in the market place. As such, we expect Aramco Trading volumes will reach, on a global basis, five Million barrels per day.

With all that said, we should all take pride in what the company achieved, as every single employee has a role to play. Without your collaboration, dedication, and intense efforts, we could have never reached where we are today.

Last but not least, remember that safety requires teamwork effort and is the responsibility of each individual. We must continue our relentless pursuit of sustaining a culture in which zero incidents is the only acceptable objective. We all share the benefits of a healthy and safe workplace, So please think safe and work safe.

Message from the CEO

Ibrahim Al-BuainainCEO & Board Member

The year 2019 has brought new opportunities and challenges to Aramco Trading. The company experienced substantial growth and maintained a strong and solid market performance despite a challenging microeconomic and geopolitical environment.

Aramco Trading continued to pursue its vision of being a key global trader, optimizing the Aramco system’s crude and refined products globally, while capturing opportunities in third-party trading. It further developed its role as the prime integrator of Downstream global assets and adopted a new global integrated business model to provide optimum support to the domestic and international system.

In 2019, Aramco Trading opened two more global offices in Fujairah, United Arab Emirates and London, United Kingdom, to ensure greater market access, wider coverage, and provide maximum value to the global system. The company accordingly further expanded its market share in key markets, in addition to penetrating new markets.

Trading activity increased as a result of the continuous engagement in third-party trading and the increase of blending activity. Aramco Trading leased storage and blending tanks in Pengerang, Malaysia, and with that, in addition to the existing leased tanks, storage capacity reached 7.7 million barrels. This assisted the company in optimizing trading activity and increasing traded volumes to reach 4.4 million barrels per day including Motiva.

Aramco Trading has set an example of resilience, agility, and reliability and is well prepared for another challenging year. Without the commitment, dedication, and hard work of its people, the company would have not reached the excellence level it reached today. On behalf of the Board of Directors, I would like to thank all the women and men of Aramco Trading for their outstanding work and continuous achievements.

Message from the Chairman of the Board

Abdulaziz Al-Gudaimi Chairman of the Board

Aramco Trading continued to pursue its vision of being a key global trader, optimizing the Aramco system’s crude and refined products globally.

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our missionTo Integrate Saudi Aramco’s global Downstream assets to maximize profitability, while ensuring that Saudi Aramco’s system is optimized and reliably balanced.

our visionTo become one of the top trading power-houses through the integration of Saudi Aramco’s Downstream assets

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our business



Traded volumes

4.4 mmbd 258 employees$60 billion 25 ships

Revenues Manpower Time charter fleet

the Kingdom of Saudi Arabia’s domestic requirements. Concurrently, the Company continues its efforts to capture opportunities in the market and maximize value by trading third-party barrels.

The robust trading house was established in 2010 under the approval of Saudi Aramco’s Board of Directors as Saudi Aramco’s trading arm. Aramco Trading established its headquarters in Al-Midra Tower, located in Dhahran, Saudi Arabia. The wholly owned subsidiary began operations in January 2012, focusing on the trading of refined products, blending components, bulk petrochemicals, and polyolefins, and later added crude oil to its portfolio. During the second quarter of 2012, chartering functions were introduced; hence, the company started selling products delivered to clients, to optimize freight operations.

ATC also assumed hedging activities as a means of mitigating price risk. It later introduced leased storage and blending facilities in 2013, to further optimize operations by customizing qualities and avoiding quality giveaways. In 2014, the company’s trading portfolio expanded by adding liquid chemicals and polymers.

In 2015 and 2016, third-party trading was the main focus of ATC, enhancing trading activities and capturing additional value. In 2017, Aramco Trading expanded its role from balancing Saudi Aramco’s local system to the supply and trading integrator of Saudi Aramco’s global Downstream assets. They also expanded their product portfolio yet again by adding Crude Oil and Condensates. Aramco Trading inaugurated its first international office and subsidiary in Singapore, ATS, marking the creation of the company’s global presence and expanding third-party business in the Asian market. In 2018, ATC focused on developing its role as the supply and trading integrator and started developing new regional offices to support its position.

In 2019, global integration was maintained and prosperous expansion was achieved for the company. In 2019, significant milestones were achieved for the company, such as establishing and beginning operations from two new subsidiaries: Aramco Trading Limited (ATL) and Aramco Trading Fujairah (ATF). Expanding its product portfolio yet again, the company introduced LNG trading in 2019.

.

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Aramco Trading Company (ATC or Aramco Trading) is rapidly growing making an immense impact on a global scale. The company’s trading activity focuses on petroleum products, crude oil, LPG, LNG, and aromatics. Today, the company is recognized as a critical trading partner globally by refiners, shipping companies, financial institutes, end users, and other products-trading companies.

ATC managed to successfully expand its trading activities, increase volumes, grow its geographical presence, establish new offices, and obtain global recognition in a short period while sustaining healthy financial and operational growth. Aramco Trading is recognized as the number-one charterer of refined products in the region, the number-one blender in the Arabian Gulf and Indian Subcontinent, and the number-one supplier of Naphtha to Asia. The company has expanded its role from merely balancing Saudi Aramco’s local energy eco-system to the supply and trading integrator of all of Saudi Aramco’s global Downstream assets.

As of 2019, the company has three subsidiaries of its own: Aramco Trading Limited (ATL) in the United Kingdom,

Aramco Trading Fujairah (ATF) in the United Arab Emirates, and Aramco Trading Singapore (ATS) in Singapore.

With four offices currently operating worldwide, ATC has broader access to markets and its clients’ bases, a more talented and diversified workforce, and a more sophisticated, yet integrated, global business model. This supports its role in integrating and optimizing global assets. In return, this aids the company in expanding geographical coverage and growing its market outreach and position.

Aramco Trading is currently among the top trading houses worldwide in terms of product traded volumes and is yet expected to grow its traded volume further with the expected rise in both the Downstream refining capacity and third-party trading activity.

The company has two corporate objectives: managing the Kingdom’s growing demand for refined products, and handling the additional production streams from Saudi Aramco’s current and future downstream investments. Aramco Trading is actively reducing its reliance on external traders while increasing Saudi Aramco’s ability to optimize

our journey



2014 2015-16 2017-18 2019

Introduction of liquid chemicals and polymers

Launch of third-party trading

Inauguration of Singapore Office, Aramco Trading Singapore (ATS), and start of crude oil trading

Integration of Global Downstream Assets

Aramco Trading has expanded its product portfolio by introducing LNG. The company has established two subsidiaries of its own: Aramco Trading Limited (ATL) and Aramco Trading Fujairah (ATF).

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2010

timeline of key events(2010-present)

2011 2012 2013

Establishment of ATC after approval of Saudi Aramco’s Board of Directors

Incorporation of Aramco Trading Company

Commencement of Aramco Trading’s operations

Start of chartering functions and derivatives trading

Introduction of lease blending and storage facilities



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Excellence We strive for excellence and are agile in addressing new challenges.• Set challenging goals and reward top performance. • Are committed to developing our people. • Encourage innovation, creativity, and diversity of

thought. • Foster teamwork and open communication.

SafetyWe operate safely and are committed to the well-being of our workforce, as well as customers.• Act safely at work, on the road, and at home. • Reward outstanding safety achievements. • Safeguard our work and global environment. • Actively encourage healthy lifestyles. AccountabilityWe take responsibility for our actions, and for meeting corporate objectives.• Place authority where responsibility lies.• Create value for our stakeholders.

• Deliver on our commitments. • Seek and provide constructive feedback. IntegrityWe follow ethical standards in conducting ourbusiness.•We treat everyone with fairness and respect. • We embrace diversity and accept differences. • We protect our assets and information. • We do not tolerate misconduct.

CitizenshipWe are a positive influence in our communities.•We are a catalyst for economic growth. • We demonstrate social responsibility. • We support our communities and act as role models. • We build solid relationships with our customers and

partners.

our values



regional offices in key strategic markets in 2019. Aramco Trading established an office in Fujairah (ATF), with the intention of effectively managing blending and storage worldwide. In the strategic location of Fujairah, ATF has access to an ecosystem of resources and provides vital support to the long-term trading vision of ATC.

Established in January 2019 and approved by the Board for operations in April 2019, ATF has grown in traded volumes and has created its mark in the fuel oil and gasoline blending market.

Consolidating storage and blending activities at ATF allows the company to manage the global needs effectively via a centralized development of expertise. Storage in both Fujairah and Egypt are governed via ATF. Several innovative solutions have been provided by ATF within ATC’s network of subsidiaries and other offices.

Aramco Trading Limited (ATL) was also established in 2019, with the office being accountable for all operations in the Mediterranean, East and West European markets, and West Africa. The office provides optimum support to the global system.

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Aramco Trading’s headquarters is located in Dhahran, Saudi Arabia. The headquarters is the heart of our company, pumping out the streams for all our global operations and integrations. The company has developed and invested in the exceptional talent needed to perform all the required functions of a full-bodied trading powerhouse, including; trading, services, chartering, hedging, risk management, IT, HR, and financial functions.

The company’s headquarters is responsible for all trading activity in the Arabian Gulf, Indian Subcontinent, and East and Southern African markets. It leverages the existing assets in the region to grow its presence in the area.

Additionally, the company integrates the Kingdom’s global downstream assets. The office also provides back-office support to all global offices.

To further support market growth and the integration of Downstream assets, Aramco Trading Singapore (ATS), commenced its trading activities on July 1, 2018. ATS is focused on integrating Saudi Aramco Downstream assets in Asia, as well as expanding third-party trading by focusing on Naphtha and, most recently, LNG.

To complement ATC’s integration and growth plans, Aramco Trading established and began operations out of new

our offices

London Office2019

DhahranHQ 2012

FujairahOffice 2019

Singapore Office2017



LPGAramco Trading started trading pressurized LPG in February 2017, starting by supplying LPG to the Red Sea, more specifically Jordan and Egypt. Shortly afterward, Aramco Trading became active in the spot market, and successfully delivered cargoes to India and the Far East. LPG (Butane and Propane) is mainly used for heating purposes in home applications, transportation fuel, and as feedstock in the petrochemicals sector.

NaphthaAramco Trading is one of the largest naphtha players in the market. Naphtha is the main feedstock for the petrochemical industry to manufacture petroleum components, such as olefins and aromatics, and can also be used for gasoline blending and production. Aramco Trading is the lead naphtha provider in the market. Asian markets, especially North Asia and South East Asia, have the highest demand for naphtha imports, where Aramco Trading commits itself to stable naphtha supplies into the Saudi Aramco naphtha system, as well as to business partners globally.

GasolineAs Aramco Trading continues its efforts to expand into a rapidly growing Far East gasoline market, a significant milestone

has been reached whereby Aramco Trading has successfully embarked on a key expansion of its Global gasoline trading portfolio, establishing its first storage and blending operation outside of the Arab Gulf. In line with Aramco Trading’s prime objective of becoming a premier market leader in Crude and Petroleum products trading, as of October 2019, Saudi Aramco’s Singapore trading unit successfully signed a 6-month storage and blending agreement, to penetrate its growing Far East gasoline trading presence. Situated along the Straits of Johor, between Singapore and Peninsular Malaysia, sprawls a vast Energy Storage Complex connected to the newly operational PRefChem Refinery. Strategically located, PITSB (Pengerang Independent Terminals Sdn Bhd) will enable Aramco Trading to competitively expand its growing footprint within South East Asia, as well as neighbouring regions, enabling the company to strengthen its relationships with producing countries and end-user customers.

Aramco Trading’s storage and blending terminal consists of eight newly built, stainless steel tanks that can safely store finished-grade and petrochemical-component materials, providing first-class blending capabilities to provide bespoke supply services to regional customers in Malaysia, Indonesia, Vietnam, and beyond.

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Aramco Trading is one of the largest naphtha players in the market. Naphtha is the main feedstock for the petrochemical industry to manufacture petroleum components.

“ “products portfolio



Aramco Trading’s storage complex will also play a key role in global Integration between its group of subsidiaries located in the Arab Gulf and North America. This will provide a “pivot point” function, enabling the company to optimize its domestic system in Saudi Arabia, as well further afield outlets in North and South America, capturing arbitrage value across its global portfolio.

JetAramco Trading continues to expand in the global jet fuel market, reaching out to supply volume into some of the world’s busiest air traffic regions, such as the United Kingdom, United Arab Emirates, and Singapore.

We have transformed drastically, as ATC started as producers; we diversified our supplies from non-Saudi Arabian origin; These countries include South Korea, China, Malaysia, India, Egypt, and the AG.

In addition, our third-party traded volume has increased since 2018, as we optimize through various swaps across Asia and Europe.

Diesel2019 was a year characterized by volatility in the diesel market. Alongside geopolitical tensions and trade conflicts, the impending implementation of IMO 2020 also created significant encouragement for the diesel market as many expected the increase in low sulfur bunker demand to create a spillover effect onto the diesel pool. Despite these macro uncertainties, volatility in markets presented Aramco Trading diesel significant opportunities as we capitalized on physical arbitrage movements, maximizing our geographical advantage as we moved barrels both east and west, based on price differences in time and location.

Aramco Trading has evolved from the traditional roles of producer and refiner as we increased our sourcing capabilities globally with our trading partners, lifting physical barrels from India, AG, South Korea, Japan, China and Malaysia. It was also critical to create a stable and diversified end user flow as we supplied diesel into Africa, India, Egypt, Europe, Argentina, Hong Kong, Australia and Vietnam. With a network of global supply and end user shorts, we

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products portfolio

Aramco Trading continues to expand in the global jet fuel market, reaching out to supply volume into some of the world’s busiest air traffic regions.

“ “



were able to optimize flows and capture maximum margins. Through this global network and active trading relationships we built, we were also able to navigate through times of geopolitical tensions during 2019 when there was a disruption in supply, adequately fulfilling the Kingdom’s requirements as well as the committed sales we had with our trading partners.

Fuel OilWe offer our customers a range of fuel oil products, and we follow the global fuel oil market closely, with multiple trading hubs in United States, Europe, Asia, London, and Fujairah. These hubs identify trading opportunities and determine blending strategies.

Aramco Trading leases a fuel oil blending facility in Fujairah to deliver products that meet our customers’ requirements.

SulfurAramco Trading is the one of the prime exporters of sulfur in the Arabian Gulf and Red Sea regions. Sulfur is removed from most petroleum products, as mandated

by global environmental regulations. As a result, many refinery and gas processing facilities produce associated sulfur. Sulfur is an important raw material that is used in fertilizers and insecticides. Sulfuric acid is also used in gunpowder, matchsticks, and other industrial materials such as asphalt and cement.

PetCokeAramco Trading began exporting petcoke in 2015, and has since emerged as the largest exporter of high-sulfur petcoke in the region. Petcoke is a refining by product with a variety of types produced around the world. Petcoke is used in the production of cement, aluminium, and steel, as well as in power generation.

LNGAramco Trading established its LNG trading desk in late 2018, with the aim to optimize markets and enhance Saudi Aramco’s global LNG portfolio. LNG is natural gas that is liquefied for easier and safer transportation on special LNG ships, and then re-gasified at delivery ports that are typically linked to the natural gas pipeline system. The main usage

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LNG is Natural Gas that is liquefied for easier and safer transportation on special LNG ships.

“

products portfolio“



is to power generation plants and domestic usage, as well as emerging applications such as transportation and as ship fuel (bunker) and other applications. Aramco Trading has already started its trading activities for LNG, with the aim to grow its LNG portfolio further with the expanding LNG global portfolio of Saudi Aramco.

Crude Oil and CondensateIn 2019, ATC continued its path of rapid expansion and significantly grew, as well as diversified, its portfolio of internationally traded crude oil grades.

This was achieved by leveraging the company’s expertise and skilful manpower in the trading business, as well as through increased market presence in key global oil hubs such as London and Singapore. This has aided the company to establish a strong, wide-reaching geographic presence and to focus on customer acquisition and network broadening. ATC has ventured into new regions, sourcing different varieties of crude oil grades from Asia, Europe, Africa, and the Americas, to aid and complement our growing trading portfolio.

ATC’s crude trading business has been a cornerstone in pursuing Saudi Aramco’s efforts to integrate its downstream refining assets. This is been realized by providing the refineries with wide range of feedstock selections that will help to optimize the facilities process, also by utilizing the company’s capability and positioning that allow us to react promptly to market dynamics and capturing additional value that includes arbitrage opportunities.

ATC will continue providing flexibility and creative solutions to our customer’s base, which include end users located all around the major refining areas.

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ATC’s crude trading business has been a cornerstone in pursuing Saudi Aramco’s efforts to integrate its downstream refining assets.“

products portfolio

“



Liquid Chemicals The year 2019 also brought Aramco Trading Singapore (ATS) the first full year of trading of propylene oxide and olefins, and also the first full year of ATS trading within the Aramco Chemicals Company (ACC) global structure.

Within the first year of propylene oxide trading, ATS traded propylene oxide (PO) from S-Oil into North East Asia and South East Asia. The emphasis on diversification into Taiwan and Thailand during the 2019 PO trading structure has allowed ATS to increase its cooperation with Shell into 2020, resulting in a term contract swap agreement between both parties involving deliveries into Taiwan and Thailand. This will allow ATS to service its term contract into Thailand, as well as reduce its reliance on China as the sole sales destination for ATS’s PO given the current business climate.

As of May 2019, ATS officially took over the purchasing functions for C2 and C3 for Arlanxeo (a wholly owned subsidiary of Saudi Aramco) Changzhou into this EPDM plant in China. The trading structure in 2019 has allowed ATS to supply a majority of the C2 requirements for Prechem, as well as all the C3 requirements for Prefchem in the same year. The 2019 trading structure has also allowed ACC to establish a firm foundation on which 2020 will be built, with ATS having already concluded its first-ever C3 term contract into China for third-party trading, and various term negotiations still ongoing for C2 and C4 into China and South East Asia respectively.

The start of trading within ATS in January 2019 also saw increased cooperation between Saudi Aramco and Prefchem to help with the latter’s start up plans. Having provided a majority of the olefins

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products portfolio



requirements for the Prefchem start up, ATS also won all the tenders to supply Hexene-1 and N-hexane to Prefchem for the start-up of its downstream polymer plants. The supply of n-hexane to Prefchem was a highlight to note as this involved the first time ATS was involved in trucking deliveries to its counterparty. This required close coordination between the supply chain team for Polymers in ATS, the operations team for liquid chemicals in ATS, as well as the back-end finance and legal team in ATS. The whole operation proceeded very smoothly and concluded its operation in December 2019.

ATS also started its offtake of Petro Rabigh volumes in July 2019 and will also take over supply of feedstock to Petro Rabigh as of January 2020. Since the formalisation of the novation of contracts, ATS has seamlessly taken over the responsibilities and delivered Phenol, Acetone, and MMA taken by Saudi Aramco (Aramco Trading Singapore /Aramco Trading Company/Aramco Chemicals Company) in 2019. This change in offtake entity will allow Saudi Aramco to be nearer to, and thereby increasing its presence in, the main markets of the Phenol Acetone and MMA in Asia.

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products portfolio

ATS also started its offtake of Petro Rabigh volumes in July 2019 and also took over supply of feedstock to Petro Rabigh as of January 2020.

“ “



Aramco Trading leased its first storage and blending facility in Fujairah in 2013. Since then, the storage and blending activities have been steadily growing and as of 2017, the company is recognized as the largest blender of gasoline in the region. The leased facilities played a vital role in enhancing the company’s margins by: capturing market structure, building and breaking bulks, transforming low-cost material to higher-value products, and customizing qualities to different markets.

For better market coverage, Aramco Trading expanded its storage and blending facilities in Fujairah, Yanbu’, Sidi Kerir, and Ain Sukhna. In 2019, the company leased an additional storage and blending facility in Pengerang, Malaysia, and accordingly storage capacity increased to reach 7.7 million barrels.

Also, as part of its expansion process, ATC has been using hubs for polymers shipments to enhance its distribution model. The hubs are “delay-in-transit” stock points that shipping lines have made available in strategic locations at a minimal cost. The hubs network is the backbone of our

containerized logistics, it allows ATC to have a reliable and on-time supply to key markets. During 2018, ATC operated a total of seven hubs, with five locations in Saudi Arabia (four in Jeddah Islamic Port and one in King Abdullah Port) and two in the UAE (one in each of Khor Fakkan and Jebel Ali).

The fundamental philosophy is to mitigate value leakage by optimizing the quality, providing tailored solutions to customers of several needs

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storage, blending and hubs

Yanbu FujairahAin Sukhna

Sidi Kerir

Pengerang

Aramco Trading leased its first storage and blending facility in Fujairah in 2013. Since then, the storage and blending activities have been steadily growing and as of 2017, the company is recognized as the largest blender of gasoline in the region.

“ “



ATC has managed to introduce the concept of virtual refining. ATC has engaged in several processing agreements in the Mediterranean market. This arrangement has allowed ATC to have a steady demand of crude oil in Europe, while receiving a steady stream of products in return.

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virtual refinery system



By focusing on integrity, ethics, and reliability, By focusing on integrity, ethics, and reliability, our dedicated team of experts demands and maintains recognition as the largest and most reliable charterer in the region. From chartering to optimization, our experts cover Saudi Aramco’s domestic and international supplies, including clean, dirty, and dry bulk products. We offer profound shipping solutions as our experts provide cost-effective services around the clock.

Between 25 time-chartered vessels and a strong presence in the spot market, our growth in the shipping industry remains undeniable in parallel to our successfully achieved numbers. By the end of 2019, Aramco Trading’s shipping efficiently covered over 1,857 voyages with an average of 150 voyages per month this year, and we continue to grow through constructing positive rapport and finding common ground with the industry’s key players that share our same high standards and values.

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chartering

By the end of 2019, Aramco Trading’s shipping efficiently covered over 1,857 voyages with an average of 150 voyages per month this year.“ “


Aramco Trading Annual Report 2019 34 35

ATC is a key global player, and our operations team is as diverse as the world in which we work. We have over 15 nationalities among our operation team in four offices stationed in different locations around the globe, giving us a diversity of mentality that we believe translates into a greater understanding of our customers, leading to making more informed decisions.

Our customers include national oil companies, multinationals, leading industrial and chemical companies, and the world’s largest airlines. ATC’s operations team makes sure we deliver based on our commitments to our customers. We consider the customers’ needs on time, according to the requested quantity and specification, all by handling and scheduling the movement of energy through the relevant infrastructures.

ATC’s operations team handle on average 130 ships transporting our cargoes at sea at any time, including the Saudi Arabia cabotage and around-the-globe movements, with 24/7 continuous follow up.

operations

We consider the customers’ needs on time, according to the requested quantity and specification, all by handling and scheduling the movement of energy through the relevant infrastructures.

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Trusted relationships are a key value of Aramco Trading. The company’s risk management is structured around three broad pillars: strong corporate governance, robust internal controls, and a risk-based culture.

The governance structure of Aramco Trading is composed of multiple layers providing both guidance and oversight. At the highest level is Aramco Trading’s Board of Directors. Aramco Trading’s risk management framework is approved by the Board of Directors, and documented in Aramco Trading’s Management Guide and Risk Policy.

Aramco Trading’s risk control program is designed to protect the company against significant losses due to credit, operational, or market risks in a manner that supports the company’s commercial objectives. The Risk Control Department, which is an independent group inside Aramco Trading headed by the vice president and duly reporting to the CEO and the chairman, is tasked to design and administer this program.

While Aramco Trading has strong risk management processes and systems, the company promotes a risk-based culture through regular training and awareness sessions that develop and instil competencies and a culture of risk awareness.

The Aramco Trading risk management program is continuously evolving as Aramco Trading adds new products and enters new markets around the world.

As for ATC’s Internal Audit, it provides an independent, objective assurance and consulting services designed to add value and improve the organization’s operations. It assists ATC in accomplishing its objectives by bringing a systematic and disciplined approach to evaluating and improving the effectiveness of risk management, internal control, and governance processes.

The Internal Audit is equipped with an in-depth understanding of the business

culture and systems, evaluating emerging technologies, analysing opportunities, and examining global issues, as well as assessing risks, controls, ethics, quality, economy, and efficiency. Such diversity gives internal auditors a broad perspective on the organization. That, in turn, makes internal auditors a valuable resource to ATC Executive Management and the Board of Directors in accomplishing overall goals and objectives, as well as in strengthening internal controls and organizational governance.

ATC Governance and Compliance with a holistic view ensure “de facto and de jure” that all the different policies and procedures are in place to comply with the international laws and regulations, as well as with local laws. The designed legal framework reinforces the effectiveness and the adequacy of all the rules by observing objectively all the compliance requirements.

Strategically, the business risk is mitigated by stringent compliance checks that include monitoring the onboarding counterparties, the sanctions regimes updates, and educating the business in all legal and compliance principles.

Governance and Compliance implement all the support and the best practices with the Board of Directors and Executive Management supervision to ensure the prevention of financial crimes and to reduce the business exposure to reputational damage. Adequate systems and controls are substantiated by IT and audits.

The company ensures that effective audit, risk management, and compliance systems are in place to monitor and manage the risk of the business at all levels. Tactically, we have an independent body that establishes and enforces risk control and ensures its effectiveness across all our operations. This body also systematically evaluates risk-control measures, reports risk activities, and provides the necessary checks and balances

Aramco Trading’s risk control program is designed to protect the company against significant losses due to credit, operational, or market risks in a manner that supports the company’s commercial objectives.

“corporate governance

“



Aramco Trading is determined to attract, develop, and retain talented professionals from across Saudi Arabia and around the world. We make long-term commitments to our people by developing their careers with a combination of comprehensive training programs and the real-world application of knowledge to accelerate their careers.

Our staff is composed of talented and customer-focused professionals who are energetic, empowered, and engaged. Aramco Trading Company strongly believes in the value of its employees and has a diverse workforce with employees from numerous countries. In addition to Saudi employees, there are 20 other nationalities represented in our offices globally, from countries such as Japan, Zimbabwe, Venezuela, the United States, and Belgium. Women, both Saudi and expatriates, comprise 32% of our workforce.

human resources

We make long-term commitments to our people by developing their careers with a combination of comprehensive training programs and the real-world application of knowledge to accelerate their careers.

“ “



Aramco Trading Company upholds the highest level of safety measures to safeguard the well-being of employees and the organization as a whole. The company realizes its responsibility in ensuring the protection of its employees, workplace, products, and trades, and is actively engaged to fully ensure this. Such safety measures include:

• Building Safety: Working closely with Saudi Aramco’s Office Services and Loss Prevention Groups to comply with safety standards

• Workplace Safety: Inspections by the Human Energy Management Group (Wellness Group) to ensure the safety of ATC’s environment

•Employee Safety: Showcasing and sending employees to training courses (i.e., first aid, CPR, etc.)

• Vessel, Client, and Products Safety: Vessel Inspections and Prevention Management, including: Ship Inspection and Reporting Program (SIRE), Tanker Management and Self-Assessment Audit (TMSA), and Business Continuity Drills (Crisis Management Drills).

.

Saudi Expat

78% 22%

workplacediversity

Male Female

57%

68% 32%

employeediversity

safety

The company realizes its responsibility in ensuring the protection of its employees, workplace, products, and trades, and is actively engaged to fully ensure this.“ “


Traded Volumes

our 2019 performance (2012-2019)

($BN) 2012 2013 2014 2015 2016 2017 2018 2019

Revenues 29 34 39 27 25 34 63 60

2012 2013 2014 2015 2016 2017 2018 2019

Refined, Special Products, and Crude (MBD)

724 869 1047 1253 1416 1540 2326 2504

Liquid Chemicals (MT) - - 9 15 16 22 32 441

42 43

Financial PerformanceRevenues


Al-Midra Tower BuildingFloor 3, East WingDhahran - 31311

Phone: +966138801111Fax: +966138758484

@Aramco_Tradingwww.aramcotrading.com

© 2020Aramco Trading Company

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