The Arabian American Oil Co., the historical backbone of the "special relationship" between Saudi Arabia and the United States, today celebrated the 50th anniversary of the start of Saudi oil production by inaugurating a modern research and control center in a ceremony attended by King Fahd.
After half a century in business, Aramco remains probably the soundest pillar of that relationship, having largely escaped the political strains from what is widely viewed here as the strong pro-Israeli tilt in U.S. policy toward the Middle East.
Aramco originally was a partnership of four U.S. petroleum companies and the government of the then nonindustrialized desert kingdom. Its earnings have placed the four companies among the largest seven U.S. industrial corporations, according to the annual Fortune magazine survey. To the Saudis, Aramco has provided perhaps the world's largest single money faucet--at times as much as $250 million a day in oil revenues.
Although now 100 percent owned by the Saudi government, Aramco still bears the same name it was given back in 1944, and to this day Americans hold the posts of president and chairman and many other top positions. Even the formal agreement by which the four American partners--Exxon, Mobil, Texaco and Standard Oil of California--turned over effective ownership to the kingdom in 1976 has yet to be signed by the king.
This mutually beneficial relationship was enhanced by continuing cooperation between the U.S. companies--often backed up by Washington diplomacy--and Saudi leaders headed by the ruling royal house of Saud.
"Aramco, unlike most multinationals, knew how to cooperate with the host government," Ismael Nuwab, the company's Saudi head of public relations, said.
The only indication of top level change at today's ceremony came when Oil Minister Zaki Yamani said that a Saudi would take over before the end of the year from Aramco's current president, Hugh Goerner, who is due to retire. The leading Saudi candidate for the post is Ali Naimi, presently Aramco's executive vice president.
The ceremony inside a giant granite and glass complex housing the Middle East's most advanced computerized oil research center, took place within eyesight of the kindgom's first oil well known as Damman No. 7, which is still producing 12,000 barrels a day.
Since Standard Oil of California signed its first concession for exploration on May 29, 1933, Aramco has produced more than 46 billion barrels of oil and grown to the world's largest producing oil company with a daily capacity of roughly 12 million barrels.
Its present output has been slashed to a third or less of that, however, because of the world oil glut, creating the first serious financial squeeze on the kingdom's coffers in a decade and a sharp cutback in its mammoth $235 billion five-year development plan. The government has announced a budget deficit of more than $10 billion this year, and outside analysts estimate it could run twice that high.
There was hardly an air of crisis or even deep concern today, however, as the king, accompanied by Crown Prince Abdullah and various other royal family members, toured the interior of the heavily guarded complex, which also contains a master control center for all of the kingdom's oil and gas production as well as the eastern province's electrical power.
The king is here on his first visit to this politically sensitive region since his accession to the throne 11 months ago. Site of all of the kingdom's oil wells, it has a Shiite population of about 37,000 that is subjected daily to exhortations to revolt from Iran's Islamic fundamentalist leaders.
Officially called the Exploration and Petroleum Engineering Center, the huge new complex on the north side of Aramco's sprawling American-style compound will be used among other things to study ways of increasing the rate of recovery in Aramco's numerous oil fields. The aim is to improve scientific management partly by making use of colored computer models of each deposit.
In his speech, Aramco Executive Vice President Naimi stressed the importance of the center's work in this field, noting that "even a modest increase in the oil recovery factor" could boost Saudi's recoverable reserves by more than all of those remaining in the United States, currently estimated at 23 billion barrels.
Right now the kingdom's reserves are put at 165 billion barrels, more than one-quarter of the world's total. But the average recovery factor, or the percentage of oil that can be extracted from any given field with today's technology, is only 30 to 35 percent.
The other main thrust in Aramco's policy today, after 50 years of American management, is the promotion of Saudis. The company has about 61,000 employes, of whom 34,000 are Saudi nationals. The rest includes nationals from 30 countries.
Naimi said today that Saudis provide about 90 percent of operators and managers at Aramco's various oil and gas plants and that the company has hired 5,000 Saudis annually over the past few years, raising the number of university graduates on the payroll to 3,500.