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ANNUAL REVIEW 2006taking the initiative

Initiative:1) the action of taking the first step or move; responsibility for beginning or originating.2) the characteristic of originating new ideas or methods.

4 Key Figures6 Chairman’s Message7 President’s Foreword8 Taking the Initiative12 Petroleum: Powering the Planet, Empowering Lives14 The Reserves Challenge20 Powering the Planet, Empowering Lives ... in the Far East22 The Production Capacity Challenge28 Powering the Planet, Empowering Lives ... in Saudi Arabia30 The Downstream Challenge36 Powering the Planet, Empowering Lives ... in the United States38 The Human Resources Challenge42 Powering the Planet, Empowering Lives ... in Europe44 The Community Challenge48 Powering the Planet, Empowering Lives ... in Asia50 Saudi Aramco by the Numbers© Copyright 2007 Saudi Aramco.All rights reserved.

King 'Abd Allah Ibn 'Abd Al-'Aziz Al Sa'udTHE CUSTODIAN OF THE TWO HOLY MOSQUES

His Royal Highness Amir Sultan Ibn 'Abd Al-'Aziz Al Sa'udTHE CROWN PRINCE, DEPUTY PRIME MINISTER, MINISTER OF DEFENSE ANDAVIATION, AND INSPECTOR GENERAL

KEY FIGURESOil reserves and production Recoverable crude oil and condensate reserves 259.9 billion barrelsCrude oil production (average per day)8.9 million barrelsCrude oil production (annual)3.25 billion barrelsGas reserves and production Gas reserves 248.5 trillion cubic feetGas production (average per day)8.22 billion cubic feet(raw gas to gas plants)Gas production (annual)3.00 trillion cubic feet(raw gas to gas plants)Natural gas liquids (NGL) NGL production (average per day) 1.1 million barrelsNGL production (annual)399 million barrelsNew discoveries Gas fields Zimlah, Kassab, NujaymanWells completed New oil wells 333294 onshore, 39 offshoreNew gas wells 3535 onshore, 0 offshoreTotal recompletions125 onshore, 47 offshoreWorkovers Gas wells 5 onshore, 0 offshoreOil wells126 onshore, 69 offshoreTotal oil well workovers 195Total workovers 200ABBREVIATIONS USED IN THIS REVIEW:bpd = barrels per dayscfd = standard cubic feet per dayppm = parts per millionLPG = liquified petroleum gasNGL = natural gas liquidsMRC = maximum reservoir contact wellAFK = Abu Hadriyah, Fadhili &Khursaniyah crude oil increment4 SAUDI ARAMCO

BOARD OF DIRECTORSFront Row (left to right)H.E. Dr. Abdul Rahman A. Al-TuwaijriH.E. Dr. Ibrahim A. Al-AssafH.E. Ali I. Al-NaimiAbdallah S. Jum'ahH.E. Dr. Abdulaziz I. Al-ManaH.E. Dr. Mohammed I. Al-SuwaiyelBack Row (left to right)Abd Allah S. Al-SaifVictor G. BeghiniJames W. KinnearAbdulaziz F. Al-KhayyalKhalid A. Al-FalihANNUAL REVIEW 2006 5

CHAIRMAN’S MESSAGEhydrocarbon projects, optimal investments ininfrastructure all along the value chain, stewardship ofthe natural environment, and a vigorous program ofresearch and technology development. Above all, itmeans developing the company’s people, and ensuringthey have the skills, knowledge and expertise to excelin the years and decades to come.These activities were an integral part of Saudi Aramco’sefforts in 2006, and the company closed the year evenbetter positioned to seize the many opportunities thatlie ahead.For many decades, oil and gas have fueled the prosperityof countries and communities the world over, and havecontributed immensely to the development of SaudiArabia. Energy is essential in today’s world, and becauseSaudi Aramco is a substantial supplier of petroleum toso many markets across the globe, reliability is not simplya goal for the company, it is an imperative.I am proud to note that once again in 2006, SaudiAramco maintained its record of unmatched operationalreliability, meeting the energy needs of customersand consumers throughout the Kingdom and aroundthe world.But true reliability is not just a matter of presentperformance; it also involves taking the initiative andproactively addressing future challenges.For Saudi Aramco, this means an innovative approachto its domestic and international business activities,a well-planned and well-executed series of majorI would like to thank the Custodian of the Two HolyMosques, King ‘Abd Allah Ibn ‘Abd Al-‘Aziz Al Sa’ud,and Crown Prince Sultan Ibn ‘Abd Al-‘Aziz Al Sa’ud fortheir continued guidance and unwavering support, andto express my appreciation to my fellow members of theBoard for their sage counsel. I also wish to take thisopportunity to congratulate the company’s employeeson an outstanding year of achievement. In the end, itis these dedicated men and women who have enabledSaudi Aramco to take the initiative, and to meettomorrow’s challenges today.Ali I. Al-NaimiMinister of Petroleum & Mineral Resources,The Kingdom of Saudi ArabiaChairman of the Board of Directors,Saudi Aramco6 SAUDI ARAMCO

PRESIDENT’S FOREWORDjobs, whatever their field of endeavor or professionaldiscipline. Their example and enthusiasm never ceaseto inspire me, and I thank each one for his or hercontributions to the company’s success in 2006.This Review goes beyond the company’s boundariesand reminds us of the enormous positive impact thatSaudi Aramco and its people have on our fellow humanbeings around the world.This year’s Annual Review chronicles a major energyenterprise on the move – taking the initiative, tacklingthe future and pushing the envelope. It traces thedevelopments in every facet of Saudi Aramco’s extensiveand expanding business portfolio, and notes thesubstantial progress made on a wide variety of megaprojectsand major corporate programs.Without a doubt, the impact of these activities will befelt for decades to come. But to my mind, the enduringachievements of the past year were not only aboutpetroleum, but also about people.Modern life would simply be unimaginable withoutpetroleum and the many indispensable products thatit provides. From helping to raise living standards forentire societies to enabling individuals to pursue moremobile, more dynamic and more satisfying lives, we atSaudi Aramco never forget that our efforts are measurednot only in barrels and cubic feet, but also in promiseskept, prosperity delivered and possibilities realized.Abdallah S. Jum’ahPresident & Chief Executive Officer,Saudi AramcoI take great pride in being part of a 52,000-strong teamof Saudi Aramcons, and I derive enormous satisfactionfrom the incredible energy my colleagues bring to theirANNUAL REVIEW 2006 7

AT SAUDI ARAMCO, WE UNDERSTAND THAT EVERYTHING WE DO — FROM EXPLORATION ANDPRODUCING TO REFINING AND DISTRIBUTION — CONTRIBUTES TO THE WELL-BEING OF BILLIONSOF PEOPLE, AT HOME AND AROUND THE GLOBE.ANNUAL REVIEW 2006 9

TAKING THE INITIATIVEThe challenges present in the worldwide refining industryhave also created a unique set of opportunities forcompanies willing to seize them. We are expandingour worldwide refining capacity through overseas jointand equity ventures. Domestically, we are preparingto build two new export-oriented refineries. Inaddition, we are proceeding with the construction ofour joint-venture PetroRabigh integrated refiningpetrochemicalproject.Worldwide, the petroleum industry is facing a majorhurdle in finding the human resource talent necessaryto tackle the coming challenges. Since the inceptionof Saudi Aramco nearly 75 years ago, we have operatedone of the largest industrial and professional trainingprograms in the industry. Our predominantly Saudiworkforce has guided the company to the prominentposition it holds in the world today. We continue todevelop and deploy at every level the latest trainingand professional development programs across ourentire business, from engineering and exploration tohealth care and IT.The petroleum industry is not only facing challengesregarding supply, infrastructure and human resources,but also a broad array of environmental challenges thatmust be met and overcome. One response is thedevelopment of alternative energy sources. Accordingto IEA forecasts, the share of renewable energy sourcessuch as wind, solar, photovoltaics and sea wave energywill rise to about 8 percent of the world’s primaryenergy mix by 2030, with the remaining 92 percentcoming from non-renewable sources.TOP: WE ARE WORKING TO RAISE OUR MAXIMUM SUSTAINED CRUDE OILPRODUCTION CAPABILITY BY SOME 3 MILLION BPD.ABOVE: IN THE DOWNSTREAM SECTOR, WE ARE DEVELOPING SCENARIOSTO ADD REFINING CAPACITY BOTH AT HOME AND ABROAD.At Saudi Aramco, we believe development of alternativesources of energy is important, and given the projectedgrowth in total demand, contributions from all sourceswill be needed. However, many projections for energysupplies from alternative sources may not be realistic,and if decisions about adding conventional energysupplies are made on these projections, the world couldface a significant gap between demand and supply.10 SAUDI ARAMCO

While a number of renewable and alternative energysources have long-term promise, they face considerabletechnical, environmental and commercial hurdles. Theirdevelopment should be pursued wisely and on the basisof commercial viability and technical feasibility.Because fossil fuels will continue to meet the lion'sshare of the world's energy needs for many decadesto come, improving their efficiency and lightening theirenvironmental footprint are among the most importantsteps that can be taken to preserve the natural worldfor future generations.The challenges faced by both energy producers andconsumers alike are considerable, but we believe theKingdom of Saudi Arabia, and by extension its nationalpetroleum enterprise, Saudi Aramco, is uniquely placedto respond to these pressing needs. Our unmatchedcrude oil reserves, our relatively low exploration anddevelopment costs, our technological prowess, ourlong experience in managing mega-projects, and ourfinancial strength position us to honor our commitmentsover the long term, both abroad and at home.... oil will remainthe largest singlesource of fuel withdemand projected torise to 116 millionbpd in 2030.Domestically, our role is to leverage the Kingdom’shydrocarbon reserves to benefit its people and expandits economy. Our program of investments and initiativesaddresses both domestic objectives and the largerenergy trends shaping the global economy.At Saudi Aramco, we understand how much the worlddepends on our activities and operations: This involvesnot just abstract supply and demand figures, but ratherthe livelihoods and living standards of billions of people.Those of us in the petroleum industry have both theresponsibility and the privilege of enabling peoplearound the globe to live fuller, more meaningful andmore productive lives, while building a still moreprosperous future for their children. This is an obligationwe take very seriously.SUPERTANKERS TAKE ON CRUDE OIL AT RAS TANURA’S SEA ISLANDTERMINAL. IN 2006, COMPANY TERMINALS LOGGED MORE THAN1,900 SHIP CALLS FOR CRUDE OIL, REAFFIRMING OUR POSITIONAS THE WORLD’S NO. 1 SUPPLIER OF PETROLEUM ENERGY.ANNUAL REVIEW 2006 11

World demand for oil is projectedto increase from 84 million bpdin 2005 to 99 million bpd in 2015,with, again, 70 percent of theincrease coming from developingcountries.Energy in general, and oil inparticular, is fundamental toeconomic development, and withit, improvements in the qualityof life for billions of peoplearound the world, especially indeveloping countries.Oil and its derivative productsprovide us with mobility, enableus to produce all manner ofgoods and products, help us growour food, keep us comfortablein the heat of summer and thecold of winter, and make ourlives safer, healthier andmore enjoyable.Energy is a key factor in social,economic and even culturaldevelopment. It is indispensableto the ability of countries aroundthe world to improve theirstandards of living and to enabletheir citizens to realize theiraspirations for the future.Petroleum, in turn, is essentialto the world’s collectiveenergy future.This means that we, as anindustry and as a company, areentrusted with a tremendousresponsibility. We are the onlypetroleum company that is amajor supplier to the threelargest energy markets on theplanet: North America, Europeand the Far East.Every day, people around theworld — from Boston to Beijing,from Marseilles to Mumbai —rely on us, the people of SaudiAramco, to deliver a reliablesupply of petroleum energy, todayand for many years to come.ANNUAL REVIEW 2006 13

WE MANAGE THE WORLD’S LARGEST CRUDE OIL RESERVES AND THE FOURTH LARGEST GAS RESERVESNOT FOR QUICK GAINS, BUT FOR THE LONG-TERM PROSPERITY OF THE KINGDOM AND TO ENSUREA STEADY AND RELIABLE SUPPLY TO OUR CUSTOMERS AROUND THE GLOBE.ANNUAL REVIEW 2006 15

THE RESERVES CHALLENGEMAJOR GAS DISCOVERIES IN 2006 (in millions of cubic feet per day)Well Gas flow Condensate Location Depth FieldKaran-6 80 Offshore 10,888 feet KaranZimlah-1 10 660 bpd 352 km S Dhahran 14,250 feet ZimlahKassab-1 10 220 km S Riyadh 15,750 feet KassabNujayman-1 60 2,040 bpd 280 km S Riyadh 15,000 feet NujaymanSaudi Aramco geoscientists have developed a series ofinnovative technologies to estimate and subsequentlyremove unwanted multiple reflections from seismicdata, which mask primary events indicative of oil andgas reservoirs. These technologies have considerablyreduced the risk associated with wildcat anddevelopmental drilling and are expected to play a keyrole in processing seismic data from the Red Sea.We are also conducting extensive integrated geologicaland simulation studies to optimize the new incrementsin Khurais, AFK (Abu Hadriyah, Fadhili and Khursaniyah),Manifa, Shaybah and Nuayyim.The petroleum industry is witnessing tremendousadvances in a wide range of technologies, including themassive computing power that supports numerousupstream applications. For example, the computingcapacity at Saudi Aramco’s Exploration and PetroleumEngineering Center (EXPEC) has reached 34 teraflops,or 34 trillion floating point operations per second. Thisrepresents a 300-fold increase in computing capacitysince 1999, and indicates the exponential rate ofdevelopment of upstream technology as a whole.The seismic processing environment in our EXPECComputer Center (ECC) continues to grow. In 2006,we completed the largest disk installation and seismicdata migration in the center’s history. A total of650 terabytes of new storage was installed forconventional seismic processing. Additional computercapacity was achieved through new and faster HighPerformance Computing clusters based on commodityPC hardware. The new seismic processing environmenthas increased computing capacity by 47 percent andstorage by 46 percent.Our expanding computing capacity is helping us keepahead of the curve in the crucial search for andcharacterization of new reserves.Our own POWERS simulator employs refined multimillioncell models to optimize development of multilateralmaximum reservoir contact (MRC) wells, equipped with“Intelligent Well” completions. Powerful parallelprocessors enable us to reduce computational time froma few days to a few hours.The ECC designed and opened the Event SolutionCenter, a state-of-the-art approach to reservoir studieswherein the collective skills of multi-disciplinary expertsare focused on detailed uncertainty analyses and riskassessment processes. This approach, which compressesmajor decision cycles, reduces uncertainty and providesa wider range of alternatives, has yielded success in theSafaniyah and Manifa fields and is being applied in North'Uthmaniyah. Completion time for studies has beenreduced from one to two years to one to three months.Given the scope of our operations, it is no surprise thatwe have more than 4 million engineering drawingsrepresenting the logical and physical design of ourfacilities. Engineers use these drawings in performingdaily operations at the plants, and quick access to accuratedrawings is especially critical in responding toemergencies. We have embarked on a corporatewideeffort to implement "intelligent engineeringdrawings," transforming our file-based graphical datainto information stored in databases. This approach wasadopted during the detailed design work on the AFKproject, and will be deployed on the Khurais programand the expansion projects at Shaybah and Hawiyah andYanbu' gas plants.16 SAUDI ARAMCO

We operate in very remote areas in the Kingdom, andsome of these remote operations are mobile, suchas for exploration, drilling and marine activities. Thecommunication needs for these activities can be metonly with specialized satellite systems known asVSATs (Very Small Aperture Terminals). We haveused this technology since 2001, but as our drillingschedule has accelerated, the need for greater highcapacitycommunications links has grown. To meetthis need, we have tripled the amount of bandwidthwe lease, raising the total from 72 to 216 megahertz.The new VSAT system provides robust communicationsto 300 remote sites and allows higher transmissionspeeds in support of powerful computing applicationssuch as real-time well log data and remote monitoringof seismic activities.... we arealso utilizingtechnologiesbelow groundas we seekto maximizeultimate recovery.In addition to our efforts to leverage technologyabove ground, we are also utilizing technologiesbelow ground as we seek to maximize ultimaterecovery from our fields.We are widely recognized as an industry leader in usingadvanced technology throughout our upstreamoperations. Today, Intelligent Well technology,geosteering, MRC wells and the revolutionary i-Fieldor “Intelligent Field” concept are routinely applied inour new crude oil developments.A key indicator of the role improved technology canplay in maximizing production is that, for the seventhstraight year, we lowered the aggregate water-cut inour producing fields to an overall average of less than25 percent.Recent advances in drilling technology are helpingus meet our commitment to increased production —faster, better and at lower cost. For example, modificationof the 18-5/8-inch casing point has enabled us to drilla smaller 16-inch hole section in certain reservoirs witha better rate of penetration. Net savings are 15 daysof rig time.OUR STATE-OF-THE-ART GEOSTEERING OPERATIONS CENTER IS STAFFEDROUND THE CLOCK BY GEOLOGISTS AND ENGINEERS WHO REMOTELYGUIDE DRILLING ACTIVITIES IN REAL TIME.ANNUAL REVIEW 2006 17

THE RESERVES CHALLENGEBlock A: LUKOIL Saudi Arabia Energy Ltd. (Luksar)Block B: Sino Saudi Gas Ltd. (SSGL)Block C: EniRepSa Gas Ltd. (ERS)Contract Area 1:South Rub’ al-Khali Company Ltd. (SRAK)Contract Area 2:Drilling Sites:MULEIHA-1HADIDAH-2UBAYLAH-2TUKHMAN-3SHEEH-2ISHARAT-1Oil fields Gas fieldsUPSTREAM GAS JOINT VENTURESWe expanded the use of batch drilling to areas ofhigher geological uncertainty. Batch drilling involvesdrilling in succession the same hole section in each wellon a given platform, rather than drilling each wellindividually. Once the same section is drilled in everywell on the platform, then the next section is drilled oneach well in succession. As each section is drilled, therig crew learns the characteristics of that section fromthe first well and applies this knowledge when drillingthe same section on subsequent wells.Batch drilling allows the rig to use the same mud system,bit sizes, drilling tools and casing size for all the wells atone time. This improves drilling efficiency, equipmenthandling and logistics, saving time and money onexpensive offshore drilling operations. Two platformswere batch drilled in the Marjan and Safaniyah offshorefields, with a savings of 36 and 28 days, respectively,per platform. Batch drilling eight platforms in these sameareas will result in an estimated savings of $51 million.We improved the placement of horizontal and multilateralwells in difficult geologic environments throughgeosteering, using the latest technologies in directionaldrilling such as Logging-While-Drilling (LWD). Prudentapplication of this technology is increasing the netfootage of wells placed in the reservoir and improvingproductivity and sweep efficiency. Company geologistsand engineers based in our Geosteering OperationsCenter (GOC) remotely guide drilling activities in realtime around the clock to optimize well placement.We successfully geosteered a water injector well in theSouth Dome of the Qatif field. The well was drilled toa depth of 27,200 feet (82,910 m) and is consideredthe longest single horizontal well we have ever drilled.Additionally, 10,500 feet (3,200 m) of slanted horizontalsection were drilled — a company record for the longestsingle horizontal section.Recent improvements in logging technology enhancedour ability to monitor changes in reservoir saturation. Anew generation of slim resistivity logging tools can berun through small tubulars and cased wells. In addition,new Nuclear Magnetic Resonance (NMR) tools andapplications improved our ability to monitor oil saturationin carbonate reservoirs.We completed a pilot study to investigate the feasibilityof using micropaleontology as a tool for biosteeringcoiled-tube wells. In this process, during drilling, weanalyze sub-surface samples for micro-fossils to identifystratigraphic layers in the reservoir. Micropaleontologicalbiosteering will be applied in 2007 for horizontaldevelopment wells where drilling techniques preventuse of conventional geosteering.Older fields pose unique challenges — and also offerample opportunities. A wide range of techniques nowhelp us prolong production and increase recovery fromsuch fields. All appropriate technologies are being broughtto bear, such as production equalizing, and expandabletubular and sand-screen technologies to prolong welllife, enhance well productivity, optimize drilling andcompletion, and ensure large-scale and cost-effectivedeployment.18 SAUDI ARAMCO

TOP: OUR EXPANDED EXPLORATION PROGRAM REQUIRES EXTENSIVE SEISMIC DATA GATHERING INSOMETIMES FORMIDABLE TERRAIN. ADVANCES IN SEISMIC ACQUISITION AND PROCESSING, AND INRESERVOIR CHARACTERIZATION HAVE HELPED BOOST RECOVERY RATES.ABOVE: COMPANY SCIENTISTS IN OUR RESEARCH & DEVELOPMENT CENTER INVESTIGATE A VARIETYOF ISSUES RELATED TO IMPROVING PRODUCTION AND REFINING PROCESSES AND TO LIGHTENINGTHE ENVIRONMENTAL FOOTPRINT OF THE PETROLEUM INDUSTRY.ANNUAL REVIEW 2006 19

POWERING THE PLANET, EMPOWERING LIVES ...IN THE FAR EASTWhat do all people have incommon? They are striving to livethe best life possible — a life wherebasic needs are met, where choicesare abundant and where dreamsare within reach.At Saudi Aramco, we understandthat millions of people in theFar East depend on us for asteady, reliable supply of thepetroleum energy that helpsmake this life possible.Urban centers throughout theregion are modernizing at arapid rate. Between 2005 and2015, regional urban populationsare projected to increase byroughly 352 million people. Onany given day, many of thesepeople enjoy a quality of lifeenhanced by petroleum-basedproducts, from the fuel that takesthem to work and back homeagain to the products that maketheir lives safer, healthier andmore pleasurable.20 SAUDI ARAMCO

Fueled by a stable supply ofhydrocarbons, Asian cities arenow more productive than everbefore. Many people in theregion work in industries suchas manufacturing andpetrochemicals that rely onpetroleum and its derivatives.The automotive industry, forexample, makes extensive use ofplastics to make cars lighter andmore fuel efficient while alsomaking them stronger and safer.As incomes rise, peopleincreasingly have the ability topurchase a dazzling array ofconsumer products that streaminto the region’s ports and citiesfrom around the region and theworld, delivered by petroleumpoweredships, aircraft andvehicles.From food and beveragecontainers to fiber-reinforcedcement to children’s toys andhome furnishings, plastics makeup a substantial segment ofconsumer and industrial products.Petroleum-based plastics arelong-lasting, recyclable, requirecomparatively little energy toproduce compared to processingnatural resources, and are moreenergy efficient to transport.For the last four years we havebeen the largest supplier of crudeoil to China, India, Japan, TheRepublic of Korea and Singapore.In 2006, we opened newmarketing support offices inKuala Lumpur, Malaysia, andShanghai, China, to serve theregion better.Staying ahead of the long-termenergy trends in the Far East isjust one of the ways we aretaking the initiative when itcomes to meeting the world’senergy challenges.ANNUAL REVIEW 2006 21

THE PRODUCTIONCAPACITY CHALLENGEIn recent years, world demand for petroleum has continuedto grow, but investments in production and processing capacityand distribution networks have not kept pace, straining worldenergy markets. Saudi Aramco stands out in this regard —we have committed ourselves to the largest expansionprogram in our history.By 2009, we will increase our maximum crude oilproduction capability by some 3 million barrels per day,roughly a 20 percent increase over our current capability.These new crude oil producing and processing facilitieswill supply the lighter crude grades most in demand,helping to stabilize global markets and meet growingconsumer needs in the mid-term. New productionincrements envisioned for development after the endof this decade will tap some of the Kingdom's heaviercrude reserves.One of the central components of our expansion is ourdrilling program. At a time when worldwide demandfor drilling rigs is at historic highs, we increased ourdrilling rig count by 26 percent, from 90 to 113 rigs.This total rig count comprised six exploration rigs and75 development rigs (65 onshore and 10 offshore). Inaddition, we deployed 32 workover rigs (24 onshoreand eight offshore). We drilled 368 new developmentand 13 exploration wells, and performed 206 re-entriesand 136 workovers.More than 80 percent of all wells drilled in 2006 werehorizontal wells with either single or multiple laterals.Crude oil increment drilling continued throughout theyear, including the completion of 73 wells for the Haradh-III increment, 28 of which were MRCs. Drilling for theAFK increment continued with 54 wells. We began drillingfor three other crude oil increments in 2006: Khurais,Shaybah and Nuayyim. The Hawiyah gas increment drillingprogram was initiated, with 32 wells planned.The Haradh-III Increment came on-stream in January2006, five months ahead of schedule, adding 300,000bpd of Arabian Light crude oil production capacity toGhawar, the world’s largest oil field, and 140 millionscfd of associated gas. Haradh Gas-Oil Separation Plant3 is the first plant in our Southern Area to have completelyautomated well control and monitoring, allowing remoteoperations.The Haradh-III project benefited from successfulintegration of four technologies: MRCs; Intelligent Wellcompletions (using control valves for preventing prematurewater breakthrough); geosteering (for optimal placementof wells in the reservoir for maximum recovery); andthe i-Field concept, in which real-time subsurfacedata transmissions enable continual monitoring ofkey reservoir indicators.22 SAUDI ARAMCO

WE CURRENTLY HAVE HALF A DOZEN MAJOR CRUDE OIL INCREMENTS AT VARIOUS STAGES OFDEVELOPMENT. BY THE END OF 2009, OUR MAXIMUM SUSTAINED PRODUCTION CAPABILITYWILL REACH 12 MILLION BPD.ANNUAL REVIEW 2006 23

THE PRODUCTION CAPACITY CHALLENGEAverage well production rates in Haradh-III are 10,000bpd, compared with 3,000 and 6,000 bpd for Haradh-I and II, respectively. This is due primarily to the use ofMRC wells and the previously mentioned technologies,which slashed unit well development costs threefold.If Haradh-III had been developed with conventionalvertical wells, 280 producers would have been required,as opposed to 32 MRCs, as is the present case.Khurais, the fourth largest crude oil field in the world,is the largest integrated project in Saudi Aramcohistory. This increment, which includes production fromAbu Jifan and Mazalij fields, is projected to produce1.2 million bpd of Arabian Light crude oil by 2009.Associated facilities include dehydration and compressionof 450 million scfd of gas, and expansion of SouthernArea seawater injection capacity by 4.5 million bpdto support reservoir pressure in the Khurais andGhawar fields.We operate 10,668miles (17,169 km)of pipeline totransport oil, gasand refined products.In addition, the East/West NGL pipeline capacity willbe increased from 425,000 bpd to 555,000 bpd toaccommodate increased NGL production. Downstreampipelines for stabilized crude oil, NGL, sour gas and fuelgas will also be constructed.The AFK (Abu Hadriyah, Fadhili and Khursaniyah)Development Project is designed to produce andprocess 500,000 bpd of Arabian Light crude and300 million scfd of associated gas by December 2007.The overall Khursaniyah Development Project, whichalso includes a grass-roots gas plant in addition to thecrude processing facility, is creating a significant impacton the local economy. By the end of 2006, nearly$500 million in manufactured materials — nearly halfof the total — was purchased from local vendors, andmore than $1 billion in engineering services, manufactureditems and construction, more than half the total thusfar, was obtained in-Kingdom.OUR UNPRECEDENTED PROGRAM TO EXPAND OUR CRUDE OIL PRODUCTIONCAPACITY REQUIRES THE COLLECTIVE EFFORT OF THOUSANDSOF CONTRACTOR EMPLOYEES, MORE THAN 2,000 OF WHOM ARESAUDI NATIONALS.24 SAUDI ARAMCO

Shaybah, located deep in the Rub' al-Khali, has delivered500,000 bpd of Arabian Extra Light crude oil since 1998.Construction activities have commenced to increaseproduction capacity to 750,000 bpd by late 2008.Major installations include a gas-oil separation plant aswell as gas gathering, compression and injection facilities.Manifa, originally discovered in 1957 and produceduntil 1984 when world demand for crude oil slumped,is the fifth largest crude oil field in the world. We areplanning to redevelop the field with new onshore andoffshore wells to produce 900,000 bpd of heavy crudeoil and 105 million scfd of sour gas.In collaboration with King Fahd University of Petroleum& Minerals (KFUPM), we conducted studies to determinehow best to mitigate the environmental impact of theManifa project created by the construction of 25 miles(41 km) of causeway and a 1.9 mile (3 km) bridge tosupport 27 drilling islands in the shallow waters of theArabian Gulf. There will also be 11 offshore platformsfor deeper water producing and injection wells.Onshore facilities for the Manifa project will include ninedrill sites, a central oil and gas processing facility, watersupply wells and injection facilities, and multiple gathering,water injection and product distribution pipelines. Drillingis set to begin by the end of 2009, and the incrementis scheduled to come on-stream by mid-2011.Nuayyim, a field in central Saudi Arabia, is slated toadd 100,000 bpd of Arabian Super Light crude oil by2008. Construction will commence on the grass-rootsproduction facilities in 2007.We also commissioned and began operations at fourthird-party cogeneration plants, located at 'Uthmaniyah,Shedgum and Ju’aymah gas plants and Ras TanuraRefinery. The cogen plants will produce 1,050 megawattsof electrical power for the gas plants and refinery, andharness exhaust from the power stations to produce 4.4million pounds per day of high pressure steam.Managing mega-projects involves much more thanengineering and construction: We are enhancing variousproject management processes, such as standardizingprocurement processes and equipment designs, increasingthe productivity of local design and constructioncontractors, and leveraging capital program data forimproved planning. We are also fast-tracking ourcontracting, design and purchasing activities.In addition to our work on the current roster of megaprojects,we also accomplished an impressive string ofother major projects.One example is a group of Maintain Potential projects.These projects are designed to ensure that we meet ourcommitment to the world's energy needs by maintainingour targeted maximum sustained production capability.In 2006, we connected 237 new oil and water wellsonshore, increasing oil production capacity by more than1 million bpd. We also connected 23 new gas wells,increasing gas production by 500 million scfd to supplyGhawar-area gas plants.Offshore, 23 new platforms were installed and 38new wells were connected. To support increased drillingactivities, 11 drilling support jackets were fabricated andinstalled in only 11 months, in contrast to a normal18-22 month schedule.Work continued in the offshore Safaniyah field to install42 electrical submersible pumps to boost production by150,000 bpd. The project also involves installation of a3,000-ton tie-in platform and the upgrade of sevenexisting platforms by early 2007.In conjunction with our projects to increase crude oilproduction capacity, we are expanding our distributionnetwork.ANNUAL REVIEW 2006 25

THE PRODUCTION CAPACITY CHALLENGETOP: THE TOWERING SAND DUNES OF THE RUB’ AL-KHALI, OR EMPTY QUARTER, RISE FROM THE FLAT SURFACEOF A SABKHA, OR SALT FLAT, THE FUTURE SITE OF A GAS-OIL SEPARATION PLANT THAT WILL ADD 250,000 BPDOF ARABIAN EXTRA LIGHT CRUDE OIL PRODUCTION CAPACITY TO OUR SHAYBAH FACILITY.ABOVE: THE CENTRAL CONTROL ROOM OF THE KHURSANIYAH DEVELOPMENT PROGRAM TAKES SHAPE IN THEDESERT NORTHWEST OF DHAHRAN. THE PROJECT, WHICH WILL GATHER OIL FROM THE ABU HADRIYA, FADHILIAND KHURSANIYAH FIELDS, ALSO INCLUDES A GRASS-ROOTS GAS PLANT.26 SAUDI ARAMCO

We operate 10,668 miles (17,169 km) of pipeline totransport oil, gas and refined products from productionplants to downstream processing plants, export terminalsand refineries. The Pipeline Integrity Managementprogram continues to be a critical success factor inensuring the reliability of our pipeline network.More than 1,800 miles (3,000 km) of pipeline wereinspected in-line with high-resolution instrument-scrapingtechnologies. This ongoing inspection program providesessential data for pipeline repair and rehabilitationprograms.We commissioned the Pipeline Monitoring Center toensure smooth, efficient management of the pipelinenetwork. This center is the collection point for criticaldata, transferred from across the entire network.Driven in part by our slate of mega-projects, the pipelinenetwork is growing rapidly, with more than 1,400 miles(2,300 km) of new pipeline forecast.In 2007, we will begin the Khurais DownstreamPipeline project, which involves laying six pipelines forstabilized crude, NGL, sour gas and fuel gas to supportthe Khurais increment. We also plan to expand theShaybah-Abqaiq Pipeline capacity to 750,000 bpd insupport of the Shaybah crude oil expansion project.In 2006, Vela International Marine Limited, our whollyowned shipping subsidiary, completed more than 1,000voyages, transporting roughly 1.8 million bpd of crudeoil to customers in the United States and Europe. Thedomestic fleet carried more than half a million bpd ofcrude oil and refined products between Kingdom ports.During 2006, Vela took delivery of two new producttankers, the Altarf Star and Zaurak Star. The tankers areeach 49,000 deadweight tons, 656 feet (200 m) longand capable of carrying roughly 348,000 barrels ofrefined products. Vela also signed contracts with ashipbuilding yard in the Republic of Korea to build sixnew double-hull VLCCs (Very Large Crude Carriers) tobe delivered between 2008 and 2009. In addition, fouradditional double-hull VLCCs will also be built.THE ALTARF STAR AND THE ZAURAK STAR PRODUCT TANKERS ARE THENEWEST ADDITIONS TO VELA’S FLEET.In recognition of Vela’s work in developing Saudi seaman’sdocumentation consistent with the International MaritimeOrganization's globally recognized “White List”requirements, Vela received the first six Saudi seagoingseaman’s books issued by the Saudi Ministry of Transport.Two young Saudi captains earned their Class 1 MasterMariner Certificates, one of the highest qualifications inthe maritime industry.The U.S. Coast Guard notified Vela that the companyachieved the prestigious “Quality Shipping for 21stCentury” designation for all 19 of its VLCC vessels. Thisis a designation received by less than 10 percent of theforeign-flagged ships operating in the United States. Inaddition, 17 Vela vessels received awards from the U.S.Coast Guard for their Automated Merchant VesselReporting system.ANNUAL REVIEW 2006 27

POWERING THE PLANET, EMPOWERING LIVES ...IN SAUDI ARABIAWe have been meeting theenergy needs of the world fornearly three-quarters of a century,but perhaps more importantly,we have been fueling thedevelopment of the Kingdom ofSaudi Arabia for just as long.In our early years, we madesignificant contributions to thehealth and welfare of the Saudipeople by building schools,hospitals and roads. We led theway in eradicating malaria in theEastern Province and assisted inthe growth of grass-roots serviceand manufacturing industries.In recent decades, as both thecompany and the country havebecome more global in outlookand reach, our strategy todevelop the domestic economyhas evolved.Today, our role at home isto leverage the Kingdom’shydrocarbon reserves to benefitits people and expand theeconomy.We have been working toenhance the domestic private28 SAUDI ARAMCO

sector’s competitive ability toprovide an increasing amount oflocal content in all our projects,big and small. These projectsproduce a multiplier effect onthe domestic economy,stimulating associated industriesand creating jobs.Opportunities abound in fieldssuch as project engineeringand construction, oilfield services,and material and equipmentmanufacturing — not onlyfor the Kingdom’s petroleumindustry but for the whole region.In 2006, we executed 2,000contract actions valued atapproximately $16 billion, mostof which were awarded to fullySaudi-owned or joint-venturecompanies.Two seamless pipe and OCTG(oil country tubular goods)projects, with a total investmentof around $750 million, areexamples of how our recentcapital expansion program — andour long history of fostering thedevelopment of local expertise— are currently benefiting thelocal economy. These projects areanticipated to commenceoperations in 2008 and createabout 1,100 new jobs.On the Kingdom’s west coast,three new steel fabrication plantswith a total capacity of 175,000metric tons per year of processand offshore equipment areunder construction, with startupstargeted in 2007 and 2008.With a total investment of $130million, these plants are expectedto create another 2,000 jobs.We also have concludedthree five-year manufacturingagreements for the localmanufacturing and inventorymanagement of wellheadequipment valued at morethan $500 million. As a result,260 drilling wellhead items thatwere previously imported fromoverseas are now expected to beproduced locally and economically,with the potential to exportthe items to other countries inthe region.At Saudi Aramco, we not onlytake great pride in looking backat our legacy to our Saudi people,we also are proud of the legacywe are building now, for futuregenerations.ANNUAL REVIEW 2006 29

THE DOWNSTREAMCHALLENGEThe petroleum industry has seen tighter capacities all alongthe oil supply chain, resulting in a smaller margin for error anda curtailed ability to make up for supply disruptions andshortfalls, which in turn have led to greater price volatility.Although oil prices moderated at the end of 2006, thelong-term demand trend will continue to rise, meaningrefining capacities matched to crude oil grades will needto increase accordingly to support continued globaleconomic growth. Increased demand for natural gas isalso placing strains on the industry.Tight capacity is particularly apparent downstream, wherethere is a sizable mismatch between available crude oilsupplies and existing refinery configurations. This gapis forecast to widen unless there are appropriateinvestments in optimal refining systems, since futurecrude supplies are going to be heavier and more sour,while the slate of refined products will continue to growwhiter and lighter with more demanding specifications.Saudi Aramco is taking the initiative to respond to marketneeds through a systematic program of strategicinvestments all along the petroleum value chain to helpmeet future global energy demand while simultaneouslygrowing the Kingdom's economy.Currently, we have more than 3.5 million bpd of refiningcapacity evenly split among Saudi Arabian andinternational markets. We are studying the possibilityover the next five years of working with a range ofpartners to expand that capacity by nearly 50 percent,to almost 6 million bpd. A crucial difference is that muchof this capacity will be able to process heavy, sour crude,helping alleviate the worldwide mismatch between crudequality and refinery configurations.All told, we are considering scenarios to build close to2 million bpd of additional refining capacity domesticallyand around the world, meaning we may be engaged inroughly one quarter of the announced plans for refinerycapacity increases worldwide.In May, we signed separate Memoranda of Understandingwith ConocoPhillips and Total for development of 400,000bpd export refineries in Yanbu' and Jubail, respectively.The projects are part of the Kingdom's strategy to addressgrowing global energy demands, attract foreigninvestment, create profitable businesses and provideincreased job opportunities for Saudis. These refinerieswill be designed to refine heavy, sour crude into highquality,low-sulfur products that meet current and futureU.S. and European specifications.Comprehensive studies to confirm the capital andoperating costs of both refineries are being conducted,with completion expected at the end of 2007. Uponcompletion of these studies, it is anticipated that a jointventure company will be established with each partner.At an appropriate time, and subject to regulatory approvals,an ownership interest in these joint venture companieswill be offered to the public. The targeted start-up forthe proposed refineries is the second half of 2011.30 SAUDI ARAMCO

OUR SLATE OF MEGA-PROJECTS IS NOT LIMITED TO INCREASING CRUDE OIL PRODUCTIONCAPACITY. WE ARE ALSO ADDING GAS AND NGL PROCESSING CAPACITY AT HOME ANDDEVELOPING A STRATEGY TO TRANSFORM OUR CONVENTIONAL REFINERIES INTO PETROCHEMICALMANUFACTURING CENTERS. IN ADDITION, WE ARE WORKING ON A PROPOSED REFINING,PETROCHEMICAL AND MARKETING PROJECT IN CHINA.ANNUAL REVIEW 2006 31

THE DOWNSTREAM CHALLENGEA proposed project with ExxonMobil and FujianPetrochemical Company Ltd. to triple the existing crudecapacity of the Fujian refinery in China is well under way.The preliminary engineering associated with the physicalinfrastructure of the Fujian Integrated Project wascompleted, and the engineering, procurement andconstruction phase initiated.The project, targeted for completion in early 2009, willincrease capacity from 80,000 to 240,000 bpd and alsoadd a petrochemical complex to the refinery. The resultingpetroleum products will be sold mainly through amarketing joint venture between Saudi Aramco SinoCompany Limited (SASCO) (a wholly-owned subsidiaryof Saudi Aramco), ExxonMobil and Sinopec.Our affiliate Petron, the leading oil refining and marketingcompany in the Philippines, undertook a number ofinitiatives in the past year to upgrade and expand itsfacilities, including constructing a new Petro FCC unitto produce more high-value white products andpropylene. A unit to produce other petrochemicals(benzene and toluene) is also in the works, with bothunits expected to be commissioned in early 2008.S-Oil Corporation, our affiliate in South Korea, markedits 30th anniversary this year. For the third time and thesecond year in a row, S-Oil was named the top companyin the Korea refining sector by the Korea CEO Association.Domestically, we completed initiatives to maximizerevenues at our refineries, including increasing RasTanura Refinery diesel production and exportingatmospheric gas oil. Additionally, we performed productoptimizationactivities to maximize higher-value productsat Riyadh, Jiddah, Rabigh and Yanbu’ refineries.As noted elsewhere, Ras Tanura Refinery's third-partycogeneration plant came on-stream, eliminating theneed to upgrade or expand the refinery’s in-house electricpower generating facilities and also reducing in-housesteam generation requirements.The American Association for Laboratory Accreditationawarded Ras Tanura Refinery Laboratory ISO 17025-2005 quality system accreditation, making it the firstSaudi Aramco lab to achieve this recognition.Four major capital projects were completed at Yanbu'Refinery: continuous catalyst regeneration (CCR)platformer, light straight-run naphtha isomerization unit,diesel hydrotreator (DHT) and laboratory buildingreplacement. The CCR platformer and isomerization unitadded 20,000 bpd of gasoline production, while theDHT complex improved air quality by reducing the sulfurcontent in diesel fuel.In August, Riyadh Refinery also commissioned a newdiesel hydrotreater to reduce the sulfur content in diesel.Preliminary design work started in October on a dieselhydrotreater project at Ras Tanura Refinery.We added, for domestic sale, a 91-octane gasolinegrade in addition to our current 95-octane grade. Thenew grade of gasoline was targeted for launch onJanuary 1, 2007. To achieve this target, we conductedan extensive program to develop and modernize variousfacilities, including refineries, pipelines and tankers, andthe 18 company bulk plants that handle gasoline.We are also boosting our production of natural gasand expanding our Master Gas System (MGS) to meetgrowing domestic demand from utilities and a thrivingindustrial sector.For some three decades, we have operated the MGS,the largest integrated gas gathering, processing anddistribution system of its kind. The MGS is the backboneof Saudi Arabia’s economic development anddiversification, and has the capacity to process morethan 9 billion scfd of gas and deliver more than 7 billionscfd of net sales gas.Hawiyah NGL Recovery Plant, scheduled to comeon-stream in fourth quarter 2007, will process nearly4 billion scfd of sales gas from the Hawiyah and Haradhgas plants to yield 318,000 bpd of NGL. The facility willsupply feedstock for forthcoming petrochemicalcomplexes in the Eastern and Western provinces.32 SAUDI ARAMCO

Construction progress reached the halfway point byyear’s end. Total manpower on the project will expandfrom the current 10,000 at year’s end to a peak of14,000 in early 2007. The project team has focused onpurchasing equipment from local contractors, includingawarding the low-temperature carbon steel vesselfabrication to an in-Kingdom company for the first time.Detailed engineering design is progressing to increasethe overall fractionation capacity at Yanbu' NGL Plantfrom 390,000 bpd to 585,000 bpd. This project is dueto be commissioned in December 2008. The capacity ofthe East-West NGL Pipeline will be increased byDecember 2009 to utilize fully the plant’s increasedfractionation capacity.... a program ofinvestments allalong the petroleumvalue chain to helpmeet future globalenergy demand.A new de-ethanizer column will be installed in Yanbu'Gas Plant to increase ethane and NGL processing by185,000 bpd, helping meet the growing demand forfeedstock supply for the burgeoning petrochemicalindustries in Yanbu' and Rabigh. The column is scheduledto be commissioned in December 2008.Khursaniyah Gas Plant will come on-stream inDecember 2007 and is designed to process 1 billion scfdof associated gas to produce 550 million scfd of salesgas and 290,000 bpd of ethane, plus NGL. The gas feedto Khursaniyah Gas Plant will include associated gasfrom crude production at the Khursaniyah incrementand other adjacent fields.To help meet our aggressive deadline, we are fabricating11 large vessels on site, including six NGL storage tanks230 feet (70 m) tall by 22 feet (6.6 m) in diameter, andweighing 1,100 tons each. We are already in the planningstage to nearly double the capacity of the gas plant toprocess non-associated gas recently discovered at theoffshore Karan field in a new, separate unit.The project to expand fractionation capacity at Ju'aymahGas Plant by 50 percent is on schedule to be completedin first quarter 2008. The plant’s new module is designedto fractionate ethane and NGL streams from HawiyahNGL Recovery Plant and Khursaniyah Gas Plant.WE, OR ONE OF OUR AFFILIATES, HOLD STAKES IN REFINING AND MARKETINGENTERPRISES IN JAPAN, THE REPUBLIC OF KOREA, THE PHILIPPINES AND THEUNITED STATES. A SIMILAR ARRANGEMENT IS IN DEVELOPMENT IN CHINA.ANNUAL REVIEW 2006 33

THE DOWNSTREAM CHALLENGEHawiyah Gas Plant will be expanded by 50 percent toprocess more non-associated gas. The gas-processingcapacity will rise from 1.6 billion to 2.4 billion scfd. Thisproject constitutes the final phase of the Hawiyah NGLRecovery program and is scheduled to be completed inJuly 2008.As part of the project to increase Shaybah’s crude oilproduction capacity, the Shaybah Gas CompressionUpgrade Project was commissioned in early 2006 tohandle the increasing Gas Oil Ratio (GOR) associatedwith the crude to eliminate gas flaring while maintainingmaximum crude production. The project added a capacityof 200 million scfd of gas compression to the facility.We are charting new territory for ourselves and ourindustry in the region through our strategy to transformour conventional refineries into petrochemicalmanufacturing centers to serve as hubs for newindustrial clusters. This strategy will contribute to SaudiArabia’s continued industrialization and job creation.These industrial clusters will use the refineries’petrochemical feedstocks to manufacture plastics,high-performance materials, and other value-addedgoods and products for export.Saudi Aramco’s first foray into this area is our jointventure with Sumitomo Chemical Co. of Japan to developour Rabigh Refinery into an integrated refining andpetrochemical complex.Ground was broken on the PetroRabigh project inMarch, and construction is under way. In October, oneof the heaviest lift ships in the world delivered two 1,000-ton polyethylene reactor columns, which were unloadedonto special multi-wheeled trailers for delivery to thesite. Once completed in 2008, the PetroRabigh facilitywill produce about 2.5 million tons of petrochemicalderivatives annually, in addition to high quality fuels.We are currently negotiating with Dow ChemicalCompany as a potential partner in a joint venture toconstruct, own and operate a world-scale chemicalsand plastics production complex integrated withour Ras Tanura Refinery. When fully operational, thenew petrochemical complex will be one of the largestplastics and chemicals production facilities in the world,well-situated to access most major world markets.The proposed petrochemical complex will produce anextensive and diversified slate of chemicals, operateprofitably and introduce new value chains and specialtyproducts to the Kingdom. This, in turn, will help spurdevelopment of downstream conversion industries,further diversifying the domestic economy and generatingjob opportunities for Saudis. The anticipated projectstart-up date is 2012.Direct investment in the Kingdom’s petrochemical industryduring the next five years is expected to be significant.These investments target not just the production of basiccommodity products, but also specialty and downstreamproducts that are more labor intensive.THE HAWIYAH NGL RECOVERY PLANT WILL RECOVER ETHANE ANDPROPANE FROM SALES GAS TO INCREASE THE KINGDOM’S SUPPLYOF PETROCHEMICAL FEEDSTOCK.This latest chapter in Saudi Aramco’s transformationfrom a production powerhouse to a fully integrated,international energy enterprise is further evidence of theKingdom’s efforts to leverage its resources to strengthenand diversify its economy.34 SAUDI ARAMCO

TOP & ABOVE: GIANT COMPONENTS OF THE PETRORABIGH JOINT VENTURE PROJECT ARRIVE BY SHIP ANDARE TRANSPORTED TO THE NEARBY CONSTRUCTION SITE ON MULTI-WHEELED VEHICLES. THE FACILITY, WHENCOMPLETED, IS DESIGNED TO PRODUCE APPROXIMATELY 1.3 MILLION TONS OF ETHYLENE AND 900,000 TONSOF PROPYLENE PER YEAR, PLUS 60,000 BPD OF GASOLINE. PETROCHEMICAL UNITS WILL CONVERT ALL OF THEOLEFIN PRODUCTION TO DOWNSTREAM PRODUCTS.ANNUAL REVIEW 2006 35

POWERING THE PLANET, EMPOWERING LIVES ...IN THE UNITED STATESAmerica is a nation of peoplewho are going places. They go towork, school, baseball practice,vacation destinations andgrandma’s house for the holidays.A healthy U.S. transportationindustry puts these places withineasy and affordable reach.Saudi Aramco helps provideAmerica with the energy it needsto transform the productivity ofits people into the strongesteconomy in the world.One of the keys to competing inthe global marketplace istransportation. Safe, efficienttransportation systems areessential to America’s continuedeconomic vitality and the qualityof life enjoyed by its people.From jet fuel, gasoline and dieselto the petroleum-based plasticsused in the manufacture ofautomobiles and airplanes, wehelp supply the United Stateswith the crude oil that propelscommercial and cultural relationson a global scale.36 SAUDI ARAMCO

In 2005, the transportation sectorgrew more than any other sectorof the U.S. economy. As U.S.businesses experience growthand household incomes rise,travel and trade increasecorrespondingly.Travel and trade aren’t theonly benefits of a robusttransportation industry. In 2005,the transportation sector aloneemployed more than 5 millionpeople in occupations rangingfrom pilots and air trafficcontrollers to auto parts retailersand mechanics.In this age of globalization andfreer trade, America and SaudiAramco enjoy an association thatextends beyond petroleum.Our long-standing relationshipis founded on the healthy andstabilizing market principleof interdependence.The United States economycounts on us to maintain areliable supply of crude oiland, to a lesser extent, refinedproducts and NGL. In turn, werely on U.S. firms for oil fieldservices, industrial equipment,IT hardware and software, andadvanced technological tools.At any given time, hundreds ofour Saudi employees are studyingin U.S. universities and colleges,gaining the skills and internationalexperience needed to lead thecompany in the years to come.While we look ahead, we alsoremember our past. At SaudiAramco, we value our longhistory of cooperation with theUnited States. This is why weintend to remain one of America’stop suppliers of petroleum fordecades to come and why theUnited States will continue tobe a country on the move.ANNUAL REVIEW 2006 37

THE HUMANRESOURCES CHALLENGEAchieving our commitment to meet the world’s energy needsis possible only through the dedicated efforts of our people.We continue to build on our legacy of success by investing inour people and sharing our expertise with local companies,educational institutions and other domestic stakeholders.As our industry grows more complex, as Saudi Aramcobranches out into new areas, and as the technologieswe employ become more sophisticated, the needincreases for well-trained, highly skilled professionalswho can develop, deploy, adapt and improve on thattechnology. Furthermore, the long-term vitality of theSaudi economy depends on cultivation of a highly skilledworkforce.Our approach to the long-term challenge of talentdevelopment has a new dimension. In July, King ‘AbdAllah entrusted Saudi Aramco with spearheading creationof a new, world-class, research-oriented science andtechnology university in the Kingdom. This institution,the King ‘Abd Allah University of Science andTechnology, will not only produce future leaders inscientific and technological fields, but also strengthenthe country’s research and technology capabilities.Environmental studies have been completed and thepreliminary campus design defined. The university'scharter and an interim organizational structure havebeen created. The university will be built on the Red SeaCoast, near Rabigh, and is scheduled to convene its firstclasses in the fall semester of 2009.In today’s business environment, we need not only goodengineers and skilled technicians, we also need peoplewith highly developed “soft” skills, who can build andlead cross-cultural teams, manage complex initiatives,identify new business opportunities and emergingeconomic trends, and who are equally at home workingin Yokohama or Yanbu‘.As an enterprise whose operations impact the livesof billions of people around the world, it is imperativethat we identify and groom a new generation ofleadership. Each year, managers and division headsapply a rigorous assessment procedure to identify highpotentialindividuals. This process complements ourCorporate, Management and Supervisor AssessmentCenters, run by independent experts, where the leadershippotential of candidates is tested through a series ofdemanding simulations. More than 2,250 participantshave undergone assessment through these centers.We also conduct a number of leadership developmentprograms, including the Saudi Aramco ManagementDevelopment Seminar. In addition, promising individualsare sent to high-level executive programs offered byleading universities around the world.38 SAUDI ARAMCO

OUR WORKFORCE, NEARLY 52,000 STRONG, IS 87 PERCENT SAUDI WITH ROUGHLY 50 NATIONALITIESREPRESENTED IN THE REMAINDER. WE HAVE A RICH LEGACY OF TRAINING AND EDUCATION, ANDTODAY, ALL EMPLOYEES BENEFIT FROM A WIDE ARRAY OF LEARNING OPPORTUNITIES.ANNUAL REVIEW 2006 39

THE HUMAN RESOURCES CHALLENGEOTHER TRAINING PROGRAMS• We drew upon more than 2,100 trainers andsupport staff to develop, direct and conduct trainingprograms. Recipients included 2,739 people indevelopmental positions; 6,390 participants innon-employee programs; and 1,030 full-time Saudiemployees in academic, job skills, supervisory andon-the-job programs.OUR PEOPLE PLAY A CENTRAL ROLE IN MAINTAINING OUR REPUTATION FORMEETING OUR COMMITMENTS AT HOME AND AROUND THE WORLD.Two new leadership development programs are theEconomics of Oil and the Business Acumen Program. Inthe former, conducted in partnership with our SaudiPetroleum Overseas Ltd. affiliate in London, participantsstudy the fundamental drivers of global crude oil tradeand how these forces might impact Saudi Aramco. Thelatter program is designed to enhance a broad portfolioof business and financial skills.Our management and supervisory training programsattracted more than 9,700 enrollments, including roughly1,200 enrollments in Operational Excellence programsand 500 in Competencies Development and Orientationprograms. We conducted five Saudi Aramco LeadershipForum (SALF) sessions for approximately 80 participants,and also held 13 SALF learning seminars for 660participants. The SALF Annual Forum attracted 125 SALFalumni and management participants.A key strategy in preparing our workforce for thefuture is self-development. A prime component of thisis e-Learning. At the end of 2006, our e-Learning sitehad more than 2,500 courses, nearly double the totalin 2005. Approximately 35,300 employees enrolled inat least one e-Learning course during the year, an increaseof 37 percent over 2005. More than 4,000 oil and gasoperators are benefiting from access to a web-basedOperator Training Simulation program.• We offer a mix of educational and trainingopportunities in and outside the Kingdom, includingadvanced degrees, work assignments around theworld, two-year technical degrees, short-termtechnical training and advanced medical and dentaldegrees. More than 280 employees were enrolledin these programs in 2006.• Our College Preparatory Program assists Saudistudents in gaining admission to universities andenhances their study skills. In 2006, 300 studentssuccessfully completed this program. And, for thefirst time, 60 Saudi females were admitted to theprogram.• Our Apprenticeship Program offers eligible Saudihigh school and vocational college graduates theopportunity to receive training in technical, craft,operator, services and clerical career tracks. In2006, we recruited 3,015 new apprentices,including 184 graduates from vocational colleges.At year-end, the Apprenticeship Program had morethan 5,000 enrollees.• Every summer, we conduct outreach programsfor high school and university students in theKingdom. At company training centers around theKingdom, participants attend classes in English,computers, job skills, and health and safety. In2006, 736 college students (222 females and 514males) participated.• Our Marine organization worked with a localcontractor to provide certified courses for youngSaudi contract employees to work in the offshoresector.40 SAUDI ARAMCO

TOP: MANAGING MEGA-PROJECTS HAS BECOME A CORE COMPETENCY AT SAUDI ARAMCO.ABOVE: WE OFFER TRAINING AND EDUCATION NOT ONLY TO CURRENT EMPLOYEES, BUT ALSO TO POTENTIALEMPLOYEES IN THE KINGDOM THROUGH OUR APPRENTICESHIP, SUMMER OUTREACH AND GIFTED STUDENTPROGRAMS. WE ALSO PARTNER WITH THE SAUDI GOVERNMENT AND PRIVATE SECTOR PROGRAMS IN A NUMBEROF INITIATIVES.ANNUAL REVIEW 2006 41

POWERING THE PLANET, EMPOWERING LIVES ...IN EUROPEThe major advances in humanhealth over the last half century,in Europe as well as the rest of theworld, have been made possiblein large part with products andmedicines with a petroleum base.Not only is advanced health carea major indicator of the qualityof life, the manufacture anddistribution of health-careproducts — both of which relyon a reliable supply of petroleum— are a major source ofeconomic well-being. WesternEurope is a close second to NorthAmerica in the production ofethylene and propylene, and amajor producer of benzene.Petrochemical producers inEurope count on Saudi Aramcoto help meet demand. In 2006,15 percent of both our crude oilexports and refined productexports were destined for Europeand the Mediterranean region,as was more than 8 percent ofour NGL exports.42 SAUDI ARAMCO

Petroleum finds its way into awide variety of products that helppeople live longer, better lives.Examples include plastics in hipjoints, artificial limbs, heartvalves, gloves, hoses and tubes,catheters, syringes, blood andvaccine bags, splints, transdermalpatches and oxygen masks.Medical technology is makingrapid advances, helped in partby the more sophisticated use ofplastics. For example, miniaturespiral-shaped implants made ofplastic can be positioned inblocked arteries. The implant ischarged with active substancesthat release over time andgradually break down theblockage. Eventually the supportitself dissolves.Diabetes is a major public healthissue that affects 60 millionEuropeans. It is the fourth leadingcause of death in Europe and isa risk factor for many otherdiseases. People who live withdiabetes get help controlling thedisease through the use of insulinpumps that dispense a steadyand adjustable supply of insulin,resulting in a more accuratedose than can be achieved byinjections. These pumpsincorporate plastic parts, includinga flexible plastic needle that ismore comfortable for the patientthan traditional needles.Petrochemicals are also usedas building blocks in an arrayof medicines, includingantibacterials, antihistamines,analgesics, antibiotics andsedatives, and in the pill coatingthat releases the medication inmeasured doses in addition tomaking the pills easier to swallow.At Saudi Aramco, we understandthat the petroleum we exporthelps power the sophisticatedpetrochemical industry in Europe,and that millions of people relyon this industry for the economicand quality of life benefitsit brings.ANNUAL REVIEW 2006 43

THE COMMUNITYCHALLENGEAll efforts to meet the challenges posed by growing energydemand may be for naught unless there is a correspondingcommitment to lighten the environmental footprint of ourindustry’s activities and products. Intensive efforts must alsobe made to ensure that facilities and communities are safe,healthful places in which to work and live.We share the world's concern regarding potential climatechange impact, and we are working to play a leadingrole in developing and implementing technologicalsolutions in a responsible manner. In May, we organizedan international symposium on carbon management— the first of its kind in the Middle East.As part of Saudi Aramco’s broader technology program,we are collaborating with a number of leading researchinstitutes and technology developers worldwide tointroduce new environmental technologies, such ascarbon capture and sequestration, cleaner burning fuels,more environmentally friendly engine designs, and newflue gas and crude desulfurization technologies.In addition to our efforts in energy conservation andflare reduction, we have established a dedicated CarbonManagement Team focused on coordinating our effortsto minimize carbon emissions.As our offshore activities have increased, so has ourability to combat oil spills. Saudi Aramco maintains alarge, dedicated anti-pollution fleet and regularly conductsinternational oil spill drills in cooperation with othercompany organizations, government agencies andinternational environmental organizations.Sulfur plant upgrades at Shedgum and 'Uthmaniyahgas plants were completed in late 2005 and commissionedin early 2006, significantly reducing sulfur emissions.Further reductions will be achieved in a second phaseof projects for both plants, planned for completion in2009. A similar project has begun at Berri Gas Plant. Asmentioned earlier, the diesel hydrotreaters at Yanbu’ andRiyadh refineries have reduced atmospheric sulfur dioxideemissions from diesel fuel by about 70 percent.A number of wastewater treatment plants are in theworks or planned for the near future, including facilitiesat the Ras Tanura and Ju'aymah terminals, Abqaiq Plants,East/West Pipeline pump stations, regional distributioncenters, Berri and Ju'aymah gas plants, Jiddah Refineryand onshore and offshore locations in our Northern Area.We place great importance on securing our facilities —and more importantly, our people — from harm.Company operations and communities are protected byan array of safety and security measures. Our Securitypersonnel are well-trained and participate in frequentexercises. Furthermore, our facilities feature redundantsystems so production, processing and distribution ofpetroleum can continue unabated.44 SAUDI ARAMCO

IT IS NO ACCIDENT THAT OUR COMPANY COMMUNITIES ARE SAFE, ATTRACTIVE AND ENJOYABLEPLACES TO LIVE AND WORK — IT IS A MATTER OF PRIDE. WE ARE ALSO ACTIVE IN OUR LOCALCOMMUNITIES THROUGH OUTREACH ACTIVITIES SUCH AS OUR FLEET OF MOBILE LIBRARIES, BEACHAND DESERT CLEAN-UPS, TRAFFIC SAFETY AND RECYCLING PROGRAMS, AND OTHERS.ANNUAL REVIEW 2006 45

THE COMMUNITY CHALLENGEWe also work cooperatively with Saudi governmentsecurity forces to help ensure we keep our commitmentto being the world's most reliable supplier of petroleum.Our IT organization initiated a number of projectsthat provide proactive capabilities to ensure data andsystems protection, such as intrusion detection andprevention systems, and anti-virus and anti-spyware. Werolled out a new e-Security system that serves morethan 220,000 customers around the Kingdom, reducingthe lead and cycle time of ID and sticker issuance bymore than 90 percent.... Saudi Aramcois ranked theNo.1 oil companyin the world.We conducted information technology (IT) securityawareness campaigns for 169 plants around theKingdom, and completed IT security risk assessmentsfor 10 major facilities. Safety risk assessment studieswere carried out for a number of existing facilities andmajor expansion projects, including Shedgum and Yanbu'gas plants, the Nuayyim crude increment and variousMaster Gas System expansion projects.We have upgraded the Dhahran Emergency ControlCenter so our Fire Protection Department can bettermonitor and respond to potential disasters around theKingdom. The center uses both land-based and satellitebasedtelephone and data communication systems,satellite imagery, vehicle tracking and GIS software, plusother crisis management tools.We operate one of the largest fixed-wing and helicopterfleets in the industry, and to protect this critical asset,we obtained eight Rapid Intervention Aircraft Rescueand Fire Fighting trucks. The trucks meet National FireProtection Association (NFPA) 414 standards, are fast,tough and nimble, and can operate in a variety of terrainsand conditions. Water, foam or dry chemical solutionscan be discharged from remote-controlled turrets on theroof and bumper. The vehicles are also equipped withinfrared cameras for operating at night or in poor visibility.We are not only creating initiatives to grow theKingdom’s economy, we take a leading role in improvingquality of life as well. We participated in two majorTOP & ABOVE: EMPLOYEES AND THEIR FAMILIES ENJOY ACTIVE LIFESTYLESAND HAVE A WEALTH OF EDUCATIONAL, RECREATIONAL AND SOCIALOPPORTUNITIES FROM WHICH TO CHOOSE.46 SAUDI ARAMCO

traffic safety campaigns in 2006. For the 22ndconsecutive year, we participated in the Gulf CooperationCouncil (GCC) Traffic Week, distributing printed materials,taking part in exhibitions organized by traffic authoritiesand conducting presentations in local schools. We alsotook part in a month-long traffic safety campaignorganized by the Ministry of the Interior.We worked closely with the Eastern Province Municipalityin launching a recycling program for plastic, glass andaluminum in the Al-Dana residential area, part of greateral-Khobar. The same program is in effect in our Dhahrancommunity. A local factory manufactures the recyclingbins, eliminating the need to import them and reducingthe cost by half.For more than five decades, Saudi Aramco has providedsubsidized home loans to eligible Saudi employeesthrough our Home Ownership Program. In 2006, wegranted 1,729 new home loans, bringing the total ofhomes that have been financed to more than 54,700.Our commitment to the education of the children of ourSaudi employees, and to children of the Kingdom atlarge, dates back to the 1950s. Since then, we haveconstructed 139 government schools (74 for boys and65 for girls) and have also provided maintenance andrenovation programs.We also organized a three-day School Kit Campaignfor families in need in Jaizan and Tabuk, and more than2,300 kits were distributed. Company employees donatedfunds that helped provide more than 3,500 school kitsfor children in the Eastern Province.The children of our expatriate employees are providedwith top quality education at company-operated schools.In 2006, all five Saudi Aramco Schools were awardedaccreditation by the Middle States Association of Collegesand Schools.Saudi Aramco Medical Services Organization(SAMSO) provides world-class medical and dentalcare to our employees and their dependents.ENVIRONMENTAL EDUCATION STARTS EARLY, WITH EMPLOYEES AND THEIRFAMILIES PLANTING MANGROVE SEEDLINGS ALONG GULF COAST BEACHES.In 2006, we added cardiac surgery and improved servicessuch as interventional cardiology, and neurosurgery. Wealso enhanced our emergency medical disaster responsecapability in Abqaiq and 'Udhailiyah, and upgraded thelevel of care offered by local clinics in these areas.A series of Network Development initiatives in al-Hasaimproved access to health care, reduced waiting times,expanded bed capacity to more than 600 and increasedavailable physician specialties tenfold.Our Diabetes Prevention program staged promotionalcampaigns in 25 company locations, and more than12,000 employees attended. We implemented smokingcessation and workplace wellness programs that focusedon healthy habits, diet and exercise.For the 18th year in a row, Petroleum Intelligence Weeklyranked Saudi Aramco as the No. 1 oil company in theworld. We like to think the honor is bestowed not onlyfor our petroleum reserves and production capabilities,but also for our bold actions to meet the growingchallenges facing our industry and our world.ANNUAL REVIEW 2006 47

POWERING THE PLANET, EMPOWERING LIVES ...IN ASIAFarmers in India and across theFar East are literally reaping thebenefits of petroleum.Since the Industrial Revolution,countries that have grownwealthy are those that increasedfood production and, at the sametime, reduced the labor forceemployed in agriculturalindustries. A major factor drivingthis development — past, presentand future — is the harnessingof petroleum energy.Thanks in part to petroleumbasedplastics, ranging from driphoses and irrigation pipes topacking materials and irrigationpumps, regional agricultureproduction increased by62 percent between 1990and 2002.48 SAUDI ARAMCO

These and other innovationshave reduced the quantity oflabor required in irrigated ricecultivation from 57.5 person-daysper hectare in 1987 to just eightperson-days per hectare in 1998— a decline of 86 percent in justover a decade.Inorganic fertilizers derived frompetroleum contribute to loweringthe per-ton cost of growing food.They are less expensive toproduce and apply than organicfertilizers, and they producehigher crop yields.Petroleum enables farmers toproduce more food with lesseffort. In fact, the amount ofenergy needed to produce aunit of food has been steadilydeclining throughout the region.This is good news for farmers andconsumers alike because lowerproduction costs allow farmersto increase profits whileconsumers benefit from lowerprices. More affordable foodprices can lead to an increase incaloric intake, thus helping reducethe prevalence of malnutrition,a condition the World HealthOrganization cites as the world’smost dangerous health problem.Gasoline- and diesel-fueledtransportation, as well as theconstruction of asphalt roads, hasimproved food security in theregion. As natural gas replacestraditional cooking and heatingfuels, air quality improves andmore woodland is preserved.Propane refrigerators and plasticstorage containers minimizewaste and reduce illness.Life expectancy in India and theFar East is up, infant mortalityrates are down, and food is moreplentiful. These improvements inthe standard of living are madepossible in part by the applicationof petroleum energy, in a varietyof forms, across the long chainof agriculture and food industries.More than half of our exports ofcrude oil, refined products andNGL are destined for the Far East.We take great pride in reliablymeeting our commitments to theregion’s energy needs becausewe know petroleum plays a vitalrole in growing, harvesting,transporting, storing and cookingthe foods that all of us eat.ANNUAL REVIEW 2006 49

SAUDI ARAMCO BY THE NUMBERSRECOVERABLE CRUDE OILAND CONDENSATE(billions of barrels)RECOVERABLE GAS: ASSOCIATED& NON-ASSOCIATED(trillions of sfc)2006‘05‘04‘03‘02259.9259.8259.7259.4259.42006‘05‘04‘03‘02248.5239.5237234.5230.60 100 200 3000 125 250CRUDE OIL PRODUCTION(annually and daily)RAW GAS TO GAS PLANTS(billions of scfd)2006‘05‘04‘03‘023.2520068.9‘053.31‘049.1‘033.15‘028.68.2247.8717.356.526.19ANNUAL (billions of barrels)• DAILY (millions of barrels) 3.00 3 6 98.12.56.80 2 4 6 8 1050 SAUDI ARAMCO

DELIVERED SALES GAS & ETHANE GAS(trillions of BTUs per day)NGL FROM HYDROCARBON GASES(millions of barrels)2006‘05‘04‘03‘025.82981.02785.5531.07915.0390.97474.6510.7574.5090.6810 2 4 6• ETHANE GAS 0 150 300 450SALES GAS2006399‘05400.4‘04387.3‘03345.1‘02316.9SULFUR RECOVERY(millions of metric tons)2006‘05‘04‘03‘022.92.72.22.22.40 1 2 3ANNUAL REVIEW 2006 51

SAUDI ARAMCO BY THE NUMBERSDOMESTIC REFINING CAPACITIES(thousands of barrels per day)• Ras Tanura: 550• Riyadh: 120• Jiddah: 88• Yanbu’: 235• Rabigh: 400Saudi Aramco Mobil Refinery Company Ltd. (SAMREF) – Yanbu’: 400(Saudi Aramco ownership: 50%)Saudi Aramco Shell Refinery Company (SASREF) – Jubail: 305(Saudi Aramco ownership: 50%)Total domestic refining capacity (including 50-percent share of SAMREF and SASREF): 1,745,500INTERNATIONAL EQUITY AND JOINT VENTURES REFINING CAPACITIES(thousands of barrels per day)• Motiva: 725 (*50%)• S-Oil: 525 (*35%)•• Petron: 180 (*40%)Showa Shell Sekiyu K.K.: 515 (*14.96%)* Saudi Aramco ownershipTotal international equity and joint venture refining capacity: 1,945,000 bpdTotal worldwide refining capacity (company-owned/operated and equity and joint ventures): 3,690,500 bpd52 SAUDI ARAMCO

2006 EXPORTS BY REGIONCRUDE:REFINED• Far East: 51.6%• Europe: 6.6%•• USA: 19.2%• Other: 14.2%Mediterranean: 8.4%PRODUCTS:• Far East: 54.4%• Europe: 8.6%•• USA: 4.3%• Other: 25%Mediterranean: 7.7%NGL*:• Far East: 52.9%• Europe: 2%•• USA: 2.1%• Other: 36.7%Mediterranean: 6.3%* includes sales on behalf of SAMREF & SASREFESTIMATED WORLDWIDE CRUDE OIL AND GAS RESERVES AS OF JANUARY 1, 2007Source: Oil & Gas JournalCONVENTIONAL CRUDE OIL RESERVES (billion barrels)NATURAL GAS RESERVES (trillion cubic feet)S. Arabia*IranIraqKuwaitUAEVenezuelaRussia132.4115101.597.879.760259.9RussiaIranQatarS. Arabia*UAEUSANigeria248.5214.4192.5184.6971.1910.51,6800 100 200 3000 600 1200 1800* Source: Saudi Aramco actualANNUAL REVIEW 2006 53

CRUDE OIL, NATURAL GAS & REFINED PRODUCTSPRODUCTION / EXPORTSCrude Oil & Refined Products (barrels) 2005 2006Crude Oil Production, excl. NG blended 3,308,601,727 3,252,943,241Crude Oil Exports 2,622,997,627 2,541,692,569Crude Oil Transported Using Company or Chartered Vessels 679,212,000 648,969,000Refined Products Production 591,948,332 595,657,467Refined Products Exports 201,589,157 183,985,356Natural Gas 2005 2006Raw Gas to Gas Plants (billions of SCF daily) 7.871 8.224Delivered Gas (trillions of BTUs daily)Sales Gas (methane) 5.5530 5.8298Ethane 1.0791 1.0278Total Delivered Gas 6.6321 6.8576Natural Gas Liquids 2005 2006NGL Production from Hydrocarbon Gases (barrels)Propane 150,587,512 149,320,199Butane 94,148,281 94,338,268Condensate 89,348,138 93,917,887Natural Gasoline 66,298,617 61,456,003Total NGL Production 400,382,548 399,032,357Natural Gas Liquids 2005 2006NGL Exports from Hydrocarbon Gases (barrels)Propane 138,038,134 141,092,586Butane 87,142,255 80,170,054Condensate 10,035,814 11,263,534Natural Gasoline 54,269,189 52,848,817Total NGL Exports 289,485,392 285,374,991SULFURSulfur 2005 2006Sulfur Recovery (metric tons) 2,716,823 2,906,911Sulfur Exports (excl. sales on behalf of SAMREF and SASREF, metric tons) 2,391,789 2,640,25054 SAUDI ARAMCO

PRINCIPAL PRODUCTS MANUFACTURED AT IN-KINGDOM REFINERIES (BARRELS)Jet Fuel/Asphalt2006 LPG Naphtha Gasoline Kerosene Diesel Fuel Oil & Misc. TotalRT 3,970,929 22,707,445 34,394,096 11,918,460 77,065,699 33,288,820 6,078,994 189,424,443Yanbu’ 2,803,127 5,264,395 9,384,326 2,351,203 30,530,511 31,813,627 - 82,147,189Riyadh 2,414,830 - 10,581,356 4,704,737 19,017,766 244,273 6,861,902 43,824,864Jiddah 1,012,808 4,630,604 4,871,648 (557,376) 7,589,983 8,250,722 1,214,961 27,013,350Rabigh 300,523 23,735,718 - 14,744,283 42,730,138 51,973,959 - 133,484,621TotalDomestic 10,502,217 56,338,162 59,231,426 33,161,307 176,934,097 125,571,401 14,155,857 475,894,467*Negative figures primarily indicate products that were reprocessed into other refined products.SAUDI ARAMCO SHAREJet Fuel/Asphalt2006 LPG Naphtha Gasoline Kerosene Diesel Fuel Oil & Misc. TotalSAMREF 134,000 - 19,520,000 10,350,000 18,640,000 14,876,000 - 63,520,000SASREF 1,981,000 13,755,000 2,147,000 11,737,000 13,785,000 12,838,000 - 56,243,000Total JV 2,115,000 13,755,000 21,667,000 22,087,000 32,425,000 27,714,000 - 119,763,000GrandTotal 12,617,217 70,093,162 80,898,426 55,248,307 209,359,097 153,285,401 14,155,857 595,657,467DOMESTIC PRODUCT SALES BY REGION (BARRELS)2006 Central Eastern Western TotalLPG 2,197,982 4,402,252 5,263,713 11,863,947Gasoline 41,580,636 22,530,829 51,188,894 115,300,359Jet Fuel/Kerosene 5,944,227 2,372,055 12,079,721 20,396,003Diesel 53,922,638 36,582,285 88,532,780 179,037,703Fuel Oil - 5,567,590 94,750,761 100,318,351Asphalt & Misc. 7,733,681 6,350,338 3,805,834 17,889,853Total 111,379,164 77,805,349 255,621,703 444,806,2162005 Central Eastern Western TotalLPG 2,555,897 4,463,936 5,172,031 12,191,864Gasoline 40,480,020 20,764,778 47,545,066 108,789,864Jet Fuel/Kerosene 5,965,130 2,280,783 12,254,209 20,500,122Diesel 50,201,672 31,104,853 83,265,679 164,572,204Fuel Oil - 6,423,095 87,867,971 94,291,066Asphalt & Misc. 6,384,916 5,832,740 3,543,159 15,760,815Total 105,587,635 70,870,185 239,648,115 416,105,935ANNUAL REVIEW 2006 55

SAUDI ARAMCO BY THE NUMBERSWORKFORCE AS OF 12/31/2006• Saudi: 44,702• Expat: 6,654Total: 51,356SAUDI DEVELOPMENT PROGRAMSNumber enrolled at year-end 2006Two-year apprenticeship 1 5,369College Degree Program (CDPNEs) 2 995Summer Programs 2,640Co-op Students 376Four-year college degree 978College Preparatory Program 308Associate Degree Program 17Advanced degree 158Advanced medical / dental 40Two-year technical diploma 571. including 282 for PetroRabigh2. excluding College Preparatory ProgramCLASSIFICATION OF SAUDI CRUDEArabian Super Light (ASL) / API > 40˚Arabian Extra Light (AXL) / API 36-40˚Arabian Light (AL) / API 32-36˚Arabian Medium (AM) / API 29-32˚Arabian Heavy (AH) / API < 29˚56 SAUDI ARAMCO

DOMESTIC OPERATIONSSAUDI ARAMCO REFINERY JOINT VENTURE REFINERY TERMINAL BULK PLANTTuraifTabukal-JawfDubaQasimSafaniyahQatifJubailJu’aymahRas TanuraYanbu’Riyadhal-HasaDhahranRabighJiddahAbhaJaizanal-SulayyilNajranANNUAL REVIEW 2006 57

INTERNATIONAL OPERATIONS5NORTH7 6AMERICA EUROPE ASIA2134SOUTHAMERICA8AFRICA1510 149 1311 122316202218 191721AUSTRALIA1. HOUSTON Aramco Services Co., Saudi Refining Inc.Aramco Associated Co., Motiva Enterprises LLC.2. NEW YORK Saudi Petroleum International, Inc.3. BERMUDA Stellar Insurance Ltd.4. CURAÇAO Bolanter Corp. N.V., Pandlewood Corp. N.V.5. LONDON Saudi Petroleum Overseas Ltd.6. ROTTERDAM Texaco Esso AOC MaatschapTEAM Terminal B.V.Texaco AOC Pumpstation Maatschap7. LEIDEN Aramco Overseas Co. B.V.8. EGYPT Sumed Arab Petroleum Pipelines Co.9. RABIGH PetroRabigh10. YANBU’ Saudi Aramco Mobil Refinery Co. Ltd.11. JIDDAH Luberef, Petrolube, Jiddah Oil Refinery Co.12. DHAHRAN Saudi Aramco Headquarters13. DUBAI Vela International Marine Limited14. JUBAIL Saudi Aramco Shell Refinery Co.15. AL-KHAFJI Aramco Gulf Operations Co. Ltd.16. BEIJING Saudi Petroleum Ltd.Aramco Overseas Co. B.V.17. SHANGHAI Aramco Overseas Co. B.V.18. SEOUL S-Oil Corporation19. TOKYO Saudi Petroleum Ltd.Aramco Overseas Co. B.V.Showa Shell Sekiyu K.K.20. HONG KONG Aramco Overseas Co. B.V.21. MANILA Petron Corporation22. SINGAPORE Saudi Petroleum Ltd.23. KUALA LUMPUR Aramco Overseas Co. B.V.58 SAUDI ARAMCO

CONTACTSSAUDI ARAMCO HEADQUARTERSP.O. Box 5000, Dhahran 31311, Saudi Arabia Tel: +9663 872 0115 Fax: +9663 873 8190E-mail: webmaster@aramco.com www.saudiaramco.comAFFILIATES• Aramco Overseas Company B.V., Hong Kong27th Floor, Suite 2708-12, Convention Plaza Office Tower1 Harbour Road, Wanchai, Hong KongTel: +852 28020100 Fax: +852 28023600• Aramco Overseas Company B.V., Kuala LumpurLevel 49,Tower 2, Petronas Twin TowersCity Center, 50088 Kuala Lumpur, MalaysiaTel: +603 2162 1818 Fax: +603 2162 1819• Aramco Overseas Company B.V., LeidenP.O. Box 222, 2300 AE Leiden, The NetherlandsTel: +31 (0)71 5160600 Fax: +31 (0)71 5160610www.aramcooverseas.com• Aramco Overseas Company B.V., Shanghai27-023 HSBC Building, No. 1000 Lujiazui Ring RoadPudong New Area, Shanghai 200120People’s Republic of ChinaTel: +86 21 6841 3088 Fax: +86 21 6841 3288• Aramco Overseas Company B.V., TokyoArk Mori Building West 16F, 12-32, Akasaka 1-ChomeMinato-Ku, Tokyo 107-6016, JapanTel: +81 03 5563 0552 Fax: +81 03 5563 0544• Aramco Services Company9009 West Loop South, Houston, Texas 77096, USAwww.aramcoservices.comAFFILIATES• Saudi Petroleum Overseas, Ltd. (SPOL)6th Floor East, Lansdowne House, Berkeley SquareLondon W1X 5LE, EnglandTel: +44 20 7629 0800 Fax: +44 20 7493 3486• Saudi Petroleum International, Inc. (SPII)527 Madison Avenue, 22nd & 23rd FloorsNew York, NY 10022, USATel: +212 832 4044 Fax: +212 446 9200• Saudi Petroleum, Ltd., BeijingRoom 3019, China World Trade TowerNo. 1 Jianguo MenWai Avenue, Beijing 100004People’s Republic of ChinaTel: +86 10 6505 5850 Fax: +86 10 6505 5841• Saudi Petroleum, Ltd., Singapore6 Battery Road, #26-01/02, Singapore 049909Tel: +65 6224 2228 Fax: +65 6225 5388• Saudi Petroleum Ltd., TokyoArk Mori Building West 16F, 12-32, Akasaka 1-ChomeMinato-ku, Tokyo 107-6016, JapanTel: +81 03 5563 0551 Fax: +81 03 5563 0588• Vela International Marine LimitedP.O. Box 26373, Dubai, U.A.E.Tel: +971 4 312 3100 Fax: +971 4 331 0585JOINT AND EQUITY VENTURESMotiva Enterprises LLC (www.motivaenterprises.com)Petron Corporation (www.petron.com)Showa Shell Sekyu K.K. (www.showa-shell.co.jp)S-Oil Corporation (www.s-oil.com)ANNUAL REVIEW 2006 59

FROM OUR HEADQUARTERS IN DHAHRAN, AND FROM FACILITIES AND OFFICES THROUGHOUT THE KINGDOMAND AROUND THE WORLD, SAUDI ARAMCO HAS TAKEN THE INITIATIVE TO ASSURE A STEADY, RELIABLE SUPPLYOF THE PETROLEUM ENERGY THE WORLD NEEDS NOW — AND IN THE FUTURE.

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