The Arabian American Oil Co., the world's biggest producer of crude oil, has embarked on a massive expansion and construction program that is strengthening a multibillion dollar web of mutual interest between the United States and Saudi Arabia.
Aramco expects to raise its production capacity to 16 million barrels a day by 1982, an increase of sixty per cent over current capacity. The Saudi government has also chosen Aramco to build and operate some of the most ambitious and expensive projects in its national industrialization program.
With Aramco actively promoting a "buy American" policy on its own projects and throughout the country, the company and the government are openly working toward a situation in which the U.S. and Saudi Arabia cannot do without each other. They view the ties as political as well as economic.
An Aramco policy paper says that the company "has played a key role in favorably predisposing Saudi Arabia toward the U.S. Aramco and its four American shareholders have been able to associate themselves with the aspirations of the Saudi people and government and are looked up as a positive force in the kingdom. We are glad to see a growing awareness in the United States government, and among the American people, of how vital to the U.S. national interest and to world peace it is to maintain and strengthen American ties with Saudi Arabia."
The long, difficult negotiations for a complete takeover of Aramco ownership by the Saudi government are continuing. The Saudis hold 60 per cent of the stock and the rest is held by the four oil companies that created Aramco - Standard Oil of California Texaco, Exxon and Mobil.
Frank Jungers, chairman and chief executive officer of Aramco, said recently that the takeover should be completed by the end of this year. Aramco's operations will go as they are however, and the four American companies will still get most of the oil.
After the full takeover, Aramco will be an operating company owned by the Saudi government but largely American managed. According to Jungers and other Aramco and Saudi government officials, it will continue to have exclusive oil production rights in its Utah-sized concession area over the world's richest oil fields.
In addition to the expansion of its own production capacity, Aramco's major projects include:
A $14 billion project to gather and distribute more than four billion cubic feet a day of gas that is currently being flared off in the oil fields. Scheduled to begin operations in 1985, this project will turn out ethane, propane, butane and other petroleum gases to power the country's own industries and for export.
Construction of a 750 mile pipeline to transport some of this gas to the new industrial port of Yanbu on the Red Sea.
Construction and management of a massive electric power network for the eastern province of Saudi Arabia, which Aramco officials say will produce more electricity than is consumed today by Los Angeles.
Development of $2 billion worth of housing, commissaries, dining halls and offices for a work force expected to grow from 20,000 to 35,000 over five years. Of the 20,067 people on the Aramco payroll at the end of last year, 1,722 were Americans, according to the company's annual report.
Looking for oil, in the eastern part of the country, offshore and in the vast empty reaches of the empty quarter desert in the South.
As it has in every year since production began, Aramco last year found more oil than it produced. Aramco figures say that the company produced 3,054 billion barrels last year, but new fields were determined to contain more than that.
The company's known reserves now stand at 177.5 billion barrels, more than a quarter of the world total. According to Jungers, "even if we found no new oil, our productions would not peak by 1985.We would have to go to 25 million barrels a day to do that."
Jungers said Aramco does not wish to become an all-purpose industrial contractor for the Saudi government. "There's a lot of feeling we've bitten off quite a chunk and there's a limit to the expertise we have."
With the Saudi government as majority owner, and probably soon as total owner, however, Aramco's management officials may not be in a possible to turn down new requests from the government to expand their operations still further.
In the company magazine, in the annual report, and in public and private comments, Aramco officials stress that the oil wealth and development boom in Saudi Arabia offer opportunities for the U.S., both in terms of money and in terms of influence. The company functions as a kind of unofficial spokesman for the country, proclaiming the necessity of promoting close ties between the kingdom and the U.S.
They project that the kingdom will be letting another $80 billion in development and service contracts in the next several years, and say that each $1 billion that goes to American contractors generates 60 thousand jobs in the U.S.
The Saudis like to deal with the Americans, Aramco officials say, and want to give these contracts to U.S. firms where possible. They argue that it is in the American interest to encourage U.S. corporations to compete for these contracts, not hinder them by political considerations such as the antiboycott legislation before congress.
"The only reasonable course open to ensure continuing free and certain access to the oil of Saudi Arabia and the other Arab suppliers is to promote and strengthen mutuality of economic and political intersts," says Aramco vice president Josephy Storey. He says that "in its foreign policy, Saudi Arabia has the same basic policy objective as the United States, peace and stability in the middle east and the world." The U.S., he argues, would be acting in its own self interest to strengthen its "close and special relationship with Saudi Arabia."