ResilienceResilience andand agilityagility SaudiAnnual Aramco Report Annual 2020 Report 2020 Resilience and agility Aramco’s exceptional past belongs to its future. Our people define our success. Energy has been running in our DNA for generations. We are proud of what we accomplished during 2020. Once again, our resilience shone through. We delivered on our shareholder commitments. And we continued to deliver an uninterrupted supply of energy to the world. Our resilience and agility has built one of the world’s largest integrated energy and chemicals companies. And we are part of the global effort toward building a low carbon economy. Our horizon has never been clearer. This Annual Report covers financial and operational aspects of Aramco from January 1, 2020 to December 31, 2020, and is issued in both Arabic and English. The print version is identical to its PDF counterpart, which is available at aramco.com. The Arabic version prevails in the event of any discrepancy. The images in this document are representative of the services provided by Aramco. Some photos may have been taken prior to the COVID-19 pandemic. Wherever possible, sustainable printing techniques were used. 01 Contents Aramco Risk Chairman’s message ...................................06 Risk management........................................ 92 President and CEO’s foreword ...................08 Risk factors ...................................................94 History .......................................................... 10 1 2020 highlights ............................................ 12 5 Aramco’s operations ................................... 14 Corporate governance Board of Directors ..................................... 108 Business model ............................................ 18 Senior Executives .......................................112 Board structure.......................................... 116 6 Audit Committee report ........................... 120 Business overview and strategy Risk and HSE Committee report ............... 122 Business overview ....................................... 24 Nomination Committee statement .......... 123 2 Market overview ......................................... 28 Compensation Committee statement ...... 124 Strategy ........................................................ 29 Compensation and other interests ........... 125 Governance, risk and compliance ............ 129 Results and performance Key 2020 metrics ......................................... 36 Additional financial CFO’s message ............................................ 38 and legal information 3 Financial performance ................................40 Additional financial information .............. 134 Upstream .....................................................48 7 Reserves information ................................ 141 Downstream ................................................ 58 Regulation of the oil and gas industry in the Kingdom ......................................... 142 Corporate .....................................................68 Additional legal information .................... 147 Forecasts and forward-looking statements ................................................. 160 Environmental, social Terms and abbreviations .......................... 161 and governance Glossary ..................................................... 163 Our approach to sustainability ................... 72 4 Corporate oversight .................................... 73 Climate change............................................ 74 Minimizing environmental impact ............. 78 Consolidated financial Accelerating human potential ................... 82 statements Growing societal value ............................... 86 Independent auditor’s report ................... 168 8 Consolidated statement of income .......... 176 Consolidated statement of comprehensive income ........................ 177 Consolidated balance sheet ..................... 178 Consolidated statement of changes in equity ................................. 179 Consolidated statement of cash flows ..... 180 Notes to the consolidated financial statements .................................. 181 The information contained in Sections 1 – 7 of this Annual Report constitutes our Board of Directors’ report. 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 Aramco Chairman’s message ...................................06 President and CEO’s foreword ...................08 History ......................................................... 10 2020 highlights............................................ 12 Aramco’s operations ................................... 14 Business model ............................................ 18 Khurais oil facility Aramco, throughout its facilities since 1the 1980s, has used renewable energy to produce oil and gas, and to reserve hydrocarbon resources for better economic use. Aramco | Annual Report 2020 Saudi Aramco 05 06 Chairman’s message We remain focused on sustaining the strength, scale, and efficiency of our operations and ensuring the continuity of a vital and reliable energy supply to our customers around the world Dear Shareholders, In this respect, Aramco took a major step in 2020 by completing its largest ever acquisition with the $69.1 billion purchase In a time of unprecedented global of a 70% stake in Saudi Basic Industries economic uncertainty due to the Corporation (SABIC). As the integration COVID-19 pandemic, Aramco displayed continues, SABIC offers a complementary exceptional resilience by continuing to presence in terms of geography, projects, deliver value to our shareholders and partners, enhancing Aramco’s throughout 2020. position in the petrochemical sector. Despite the volatile and weaker market 2020 saw significant achievements in our environment, Aramco once again gas business as we continued to expand reported solid earnings and cash flows for our production and processing capacities. the full year while demonstrating ongoing In addition, the issuance in November operational agility. The Company also of our Senior Unsecured Notes — which maintained a robust balance sheet ranged from 3 to 50 years in maturity — through a highly disciplined approach was a further reflection of investor to capital allocation. The events of 2020 served confidence in Aramco’s future story. In fulfilling previously stated intentions, Looking ahead, our focus is on more than to shine a spotlight on we delivered SAR 281 billion ($75 billion) just generating ongoing value for our in dividends for the year by declaring Aramco’s ability to deliver shareholders — it is also on our ability four quarterly dividends of approximately to continue creating value for society. SAR 70 billion ($18.75 billion). As a result, on its commitments across Against this backdrop, we recognize that we believe we will pay out the largest environmental, social and governance both economic and oil total annual dividend of any publicly (ESG) factors are a rising priority for listed company anywhere in the world price cycles.” investors today, including for many for 2020. of our shareholders. Advancing our business It is worth noting, however, that long Although markets tend to think in before the term ‘ESG’ was first coined quarters, we continue to think in decades. in the investment community, many We remain focused on sustaining the of these considerations were already strength, scale, and efficiency of our an integral part of Aramco’s approach operations and ensuring the continuity to business. Indeed, our Company has of a vital and reliable energy supply to a legacy of safety and corporate our customers around the world. While responsibility that we continue to build working to mitigate the immediate upon. For example, in the area of impacts of the COVID-19 pandemic on environmental stewardship, Aramco our operations, we are not allowing this has long used advanced technologies short-term disruption to distract us and field methodologies to produce oil, from our longer-term goals. 07 Aramco | Annual Report 2020 Aramco recognizes that environmental, social and governance (ESG) factors are a rising priority for investors today. Saudi Aramco helping us achieve one of the lowest Maintaining strong governance Expressing our appreciation upstream carbon intensities of any Our first full year as a publicly listed On behalf of the entire Board, I would international oil company. We also company led to a number of historic like to take this opportunity to thank believe that oil and gas, supported by milestones in 2020, including our all the men and women of Aramco technological innovations, will prove to inaugural post-IPO Ordinary General for their extraordinary contributions be essential in achieving an orderly global Assembly Meeting, our first post-IPO during the past year amidst a very energy transition. And we will continue earnings call with the investor community, challenging environment. I also want to seek ways to leverage innovation to and the first public issuance of our annual to express our gratitude to our further reduce our emissions. report and quarterly interim reports. shareholders as well as our customers, partners, suppliers, contractors, and We also recognize that for the world to During 2020, we also welcomed one new the communities where we operate, achieve net-zero carbon emissions