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- PESTLE ANALYSIS -

- SAUDI ARABIA -
- OIL INDUSTRY -
TEAM JUNOON

- Siddhant Chadha
- Taranpreet Singh UNIVERSITY OF PETROLEUM
1
& ENERGY STUDIES, DEHRADUN
SAUDI ARABIA & ITS OIL & GAS INDUSTRY
AN INTRODUCTION

Saudi Arabia officially known as the Kingdom of Saudi Arabia has a land mass of approximately
2.25 million square kilometers with an estimated population of 27 million people out of which
around 97% are Muslim.
Geographically, Saudi is the fifth largest state in Asia and second in the Arab.
Saudi Arabia is the world’s third largest oil producer and, largest oil exporter, as it possess around
18% of the world’s petroleum reserves, making it one of the strongest Petroleum based economy.

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“PESTLE” - INTRODUCTION
POLITICAL

TECHNOLOGICAL
T
E ECONOMIC
LEGAL L
S
SOCIAL
ENVIRONMENTAL
3
POLITICAL ANALYSIS
(FAVORABLE)
- Founded in 1932 by Abdul-Aziz bin Al Saud (Ibn Saud), is a hereditary monarchy.
- The King governs through a Council of Ministers, on which he serves as President.
- Divided into 13 provinces, each administered by a provincial governor appointed by the
King.
- One of the most powerful members of the OPEC, has a major say in World oil prices.
- Currently led by King Abdulaziz, who is fairly popular and has good relations with the
regional leaders.

Current Strengths Current Challenges Future Prospects Future Risks

Stable Governments & Lack of Democratic Policies for economic &


Security Risks
Stable Policies Setup Social Reforms

Poor implementation of Rumours that Saudi will


Legislative Reforms Accession to WTO
Standards quit OPEC
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ECONOMIC ANALYSIS
(HIGHLY FAVORABLE)
- Since the discovery of oil in 1938 has grown to be among the wealthiest nations.
- Oil revenues account for about 90 percent of export earning, and about 80 percent of
government revenues.
- Mixed Economy
- The Kingdom of Saudi Arabia has been rated as the 13th most economically competitive
country in the world - International Finance Corporation (IFC)
- GDP per capita is an estimated USD 24 000, total USD 622 Billion, 3.7% Growth

Current Strengths Current Challenges Future Prospects Future Risks

Strong & Stable GDP


Unemployment Increase in Global Economic
Growth, & Government
concerns infrastructure spending Slowdown
finances
Positive trade balance and its Economy would be boosted by Decline in Oil Prices, Inflammatory
Education sector in Saudi Arabia
current account balance has huge investments by the Saudi Fears, Weakening of Currency,
has remained underdeveloped
significantly increased from 7.6% Arabian government in the Discovery of Uncoventional
(Unemployment : 26% in 2017)
in 2000 to 24.5% in 2007 infrastructure space. Sources outside Saudi Arabia 5
SOCIAL ANALYSIS
(LESS FAVORABLE)
- The Saudi Arabia society and culture is dominated by the values of Islam and it is a
culturally rich country.
- Adherence to Islamic values and maintenance of social stability in the context of rapid
economic change has been consistent goals of Saudi Arabia's development plans.
- Saudi Arabia has ranked high (39/183) in terms of Human Development Index (HDI).
- The society remains conservative and the quality of living is increasing at a higher rate as
compared to developed countries.

Current Strengths Current Challenges Future Prospects Future Risks

Government Reforms
Comprehensive Social
Income inequality for improving Quality of
Security System Restrictive immigration
life
Investments in healthcare,
policies & growing
Poor implementation of women education, steps for population needs
Young Society poverty reduction and
Standards
disabled care. 6
TECHNOLOGICAL ANALYSIS
(FAVORABLE)
- Government has made advances to improve science and technology, since its accession to
WTO, in 2005.
- The New Science and Technology Policy to develop a more knowledge -based country.
- Companies and services previously under government jurisdiction are becoming
privatized, which will promote further boosts in research and development.
- Leading oil companies have benefited Saudi Aramco as they bring foreign technology, skill
transfer
- Digitization of the industry, Aramco capitalizing on Industry 4.0

Current Strengths Current Challenges Future Prospects Future Risks

Poor implementation of
Intellectual Property
Strong financial position Low investments in R&D Growing Focus on R&D
Rights (IPR) leading to
for technological and technological and conducive FDI
hampering of growth in
development education policies
the innovation
environment 7
LEGAL ANALYSIS
(HIGHLY FAVORABLE)
- Saudi Arabia’s legal system is founded on Sharia, which is Islamic law that stems from the
Qu’ran (Holy Book of Muslims).
- In 2010, Sharia was put into codes and regulations to cover modern issues such as
intellectual property and corporate law, Restructuring of Judicial System, women getting
right to vote.
- Following WTO commitments, Saudi Arabian legal environmental is improving with
reforms in privatization and liberalization.

Current Strengths Current Challenges Future Prospects Future Risks


Preference to Saudi
Better Business Nationals and lack of
Environment transparency in
Underdeveloped Judicial Plans of reforms in the investment laws
Ranked 25th in World Bank’s Ease of
Norms Legal Environment
doing business report Corporate taxes and laws of foreign
Radical changes in minimum capital arbitration need to become more
requirements and reduction of required transparent
procedures from 13 to 7 8
ENVIRONMENTAL ANALYSIS
(FAVORABLE)
- Recently applied environmental regulations after the country’s rapid industrialization.
- Saudi Arabia’s induction into the International Convention on Biological Diversity (CBD), the
government reinforces national environmental protection.
- Signed eighteen pacts and ratified thirty-nine environmental agreements.
- General Environmental Regulation is the government-approved association aimed to
prohibit and action that may be detrimental to the environment.

Current Strengths Current Challenges Future Prospects Future Risks

Expected loss of
Poor performance on
Focus on Environment revenue due to Kyoto
environmental indexes
Signed Kyoto Protocol in Protocol
2004 - Ranks 86 in EPI -Saudi Aramco, SABIC involved in Carbon The developed countries
Capture and Storage
- Immense impact -Reduction in gas flaring, upgrading would be cutting down on
related with oil drilling. technology for power plants. their energy consumptions.
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SUMMARY
P POLITICAL ANALYSIS - FAVORABLE

E ECONOMIC ANALYSIS – HIGHLY FAVORABLE

S SOCIAL ANALYSIS – LESS FAVORABLE

T TECHNOLOGICAL ANALYSIS –FAVORABLE

L LEGAL ANALYSIS – HIGHLY FAVORABLE

E ENVIRONMENTAL ANALYSIS –FAVORABLE


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- THANK YOU -
TEAM JUNOON

- Siddhant Chadha
- Taranpreet Singh UNIVERSITY OF PETROLEUM
11
& ENERGY STUDIES, DEHRADUN

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