this is energy this is aramco saudi aramco annual report 2019 A category all our own Saudi Aramco is the world’s largest integrated oil and gas company, producing the energy and chemicals that drive global commerce and enhance the daily lives of people around the globe. From our proven upstream capabilities and our strategically integrated global downstream network, to our focus on technology and sustainability, we have created value that places us in a category all our own. Our behavior is what defines us – as a company, as employees, as people. Everything we do is anchored by our corporate values: excellence, safety, citizenship, integrity and accountability. Reporting period and boundary The financial and operational aspects of Saudi Aramco are covered in this Annual Report. The Annual Report covers the period from January 1, 2019 to December 31, 2019 and has been issued in both Arabic and English. In the event of any discrepancy, the Arabic version shall prevail. The print version of the Annual Report is identical to its PDF counterpart, which is available on the Company’s website at saudiaramco.com. contents 1 Saudi Aramco 6 Corporate governance 06 Chairman’s message 108 Board of Directors 08 President and CEO’s foreword 112 Senior Executives 10 History 114 Board structure and composition 12 2019 highlights 116 Audit Committee report 14 Saudi Aramco’s operations 118 Risk and HSE Committee report 18 Business model 119 Nomination Committee statement 120 Compensation Committee statement 121 Compensation and other interests Business overview 124 Governance, risk and compliance 2 and strategy 24 Business overview 28 Market overview Consolidated financial 29 Strategy 7 statements 128 Independent auditor’s report 136 Consolidated statement of income 137 Consolidated statement 3 Results and performance of comprehensive income 38 CFO’s message 138 Consolidated balance sheet 39 Financial performance 139 Consolidated statement of changes in equity 46 Upstream 140 Consolidated statement of cash flows 54 Downstream 141 Notes to the consolidated financial statements 62 Corporate Environmental, social Additional financial and governance (ESG) 8 and legal information 4 202 Additional financial information 66 Sustainability at Saudi Aramco 206 Reserves information 68 Governance framework 208 Regulation of the oil and gas industry 72 Environmental stewardship in the Kingdom 78 People and communities 212 Additional legal information 218 Forecasts and forward-looking statements 219 Terms and abbreviations 221 Glossary 5 Risk 88 Risk management 90 Risk factors King Salman bin Abdulaziz Al-Saud The Custodian of the Two Holy Mosques His Royal Highness Prince Mohammed bin Salman bin Abdulaziz Al-Saud Crown Prince, Deputy Prime Minister and Minister of Defense of the Kingdom of Saudi Arabia 04 saudi aramco 05 Saudi Aramco Annual Report 2019 saudi aramco 06 Chairman’s message 08 President and CEO’s foreword 10 History 12 2019 highlights 14 Saudi Aramco’s operations 18 Business model 06 chairman’s saudi aramco message As the need for energy continues to rise, we seek to be a force for progress and opportunity, not only by providing reliable energy, but also by investing in the sustainability of our business and the world in which we all live In 2019 Saudi Aramco made history. Operationally, in 2019 Saudi Aramco also demonstrated remarkable resilience in the During the year, we achieved a number face of unprecedented adversity following of major milestones that served to solidify attacks on our facilities at Shaybah, Abqaiq Saudi Aramco’s standing as the world’s and Khurais. Thankfully, in each of the largest integrated oil and gas company. First incidents there were no fatalities and overall and foremost among these milestones was output was reduced only temporarily due to our initial public offering (IPO) and listing on the extraordinary efforts of many individuals. the Saudi Stock Exchange (Tadawul), which provided eligible investors the first-ever Financially, Saudi Aramco once again opportunity to directly take a stake in our delivered solid earnings and strong cash company. Indeed, we are pleased to welcome flows through consistent operational all our new investors alongside our majority performance, cost management and fiscal shareholder, the Government of Saudi Arabia. discipline. In addition to completing the world’s largest Careful stewardship IPO in 2019, we established our presence It has been almost nine decades since the in the global capital markets through We are actively working Kingdom granted an initial concession to a landmark US$12 billion inaugural explore for oil across the remote sands of the towards providing international bond issuance earlier in the Arabian desert. Over that time, our company year, as well as disclosing detailed financial, has built a reputation for both safety and sustainable and profitable operational and reserves information for the reliability. We are passionate about first time in our history. The success of the growth, and increased preserving the environment and are actively Tadawul listing and the response to our working towards providing sustainable and global debt offering were strong votes of value for our shareholders profitable growth, and increased value for investor confidence in Saudi Aramco’s track our shareholders and customers. and customers.” record and potential for continued growth. Of course, value creation means more Another important milestone specific to than just dollars generated or dividends Saudi Aramco’s downstream strategy in 2019 distributed – it is also measured by the was the signing of the purchase agreement positive contributions that a company makes to acquire a majority equity interest in to people, to communities and to the world Saudi Basic Industries Corporation (SABIC). as a whole. On this count, Saudi Aramco Following the expected closing of this continues to excel by prudently managing the transaction in the first half of 2020, Kingdom’s reserves while meeting the daily Saudi Aramco will be a major petrochemical needs of its customers around the world. producer globally. 07 Annual Report 2019 Saudi Aramco Saudi Aramco announces its intention to float on Tadawul As the need for energy continues to rise, In 2019, we also welcomed one new Board we seek to be a force for progress and member, H.E. Nabeel M. Al-Amudi, who opportunity, not only by providing reliable previously served as the Minister of Transport energy, but also by investing in the sustainability of Saudi Arabia. The wide range and high We achieved a number of our business and the world in which we level of experience and expertise that our of major milestones that all live. We remain committed to leveraging directors individually bring to the table will technology and innovation to lower the be vital as we continue to pursue our strategy served to solidify Saudi climate impact of our industry and its products. for the future. We endeavor to strengthen our legacy of Aramco’s standing as the corporate responsibility and continue to Saudi Aramco’s achievements during the manage the environmental, social and past year would not have been possible world’s largest integrated governance (ESG) issues that are important without the clear vision and continued to our stakeholders and our business. support of the Custodian of the Two Holy oil and gas company.” Mosques King Salman bin Abdulaziz Al-Saud, Strong governance and His Royal Highness Prince Mohammed bin Salman bin Abdulaziz Al-Saud, Crown It was an honor to be appointed to serve as Prince, Deputy Prime Minister and Minister Chairman of the Board of Directors (Board) of Defense of the Kingdom of Saudi Arabia. of this great company. I am deeply humbled by the responsibilities of the important role Saudi Aramco plays as a key contributor to Shared success the Kingdom of Saudi Arabia and its Vision On behalf of the Board, I want to take this 2030, as well as to global growth and opportunity to pay tribute to all the men prosperity. My promise to all shareholders and women of Saudi Aramco – not only now, is to work closely with my Board colleagues but throughout its history – whose collective and with Amin and his entire management performance and commitment have team to continue to deliver on our strategy propelled our company to the position while providing sustainable and growing it occupies today. I also want to thank all dividends to our shareholders through our new shareholders as well as our crude oil price cycles. long-standing customers, partners, suppliers, and communities where we operate for The strong position of Saudi Aramco today is their confidence in Saudi Aramco and their a testament to the considerable contributions contributions to our shared success. of my predecessor, H.E. Khalid A. Al-Falih, who led the company through an important time of transformation. On behalf of the H.E. Yasir O. Al-Rumayyan Board, I thank Khalid for his dedication and Chairman of the Board of Directors for his many years of service to Saudi Aramco and to Saudi Arabia. 08 president and saudi aramco CEO’s foreword 2019 was a year in which the world was offered unprecedented insight into what this company is made of, the spirit of our people, and the principles that guide us When the definitive history of Saudi Aramco proved negligible. This demonstrated how is written, 2019 will be considered exceptional seriously Saudi Aramco takes its role and for a number of reasons. Through a variety of responsibility in meeting market demands. circumstances both planned and unexpected, it was a year in which the world was offered Notwithstanding bearish signals that global unprecedented insight into what this company economic growth slowed to some degree in is made of, the spirit of our people, and 2019, global demand for crude oil is expected the principles that guide us. And with this, to continue growing for years to come, with I believe the public gained a powerful GDP growth led primarily by non-OECD appreciation not only of how we operate, Asia Pacific.