Officially known as the Saudi Arabian Oil Company, most popularly known as Saudi Aramco, or simply Aramco is a Saudi Arabian national petroleum and natural gas company. With a value estimated anything between US$ 1.25 trillion and 10 trillion Saudi Aramco is the world’s most valued company. With a workforce of 55,000 the state owned oil giant enjoyed revenues estimated at US$ 378 billion in 2014. Saudi Aramco has the largest daily production of oil in the world which comes as no surprise considering they have the largest proven crude oil reserves on the planet. The company has a proud history as the business back bone of Saudi Arabia with huge transformative plans underway as part of the Saudi Vision plan 2030.
As briefly mentioned, the history of Saudi Aramco is a rich and at times complicated web, this article will aim to summarise this history and give you a brief introduction in to the events, circumstances and individuals that have shaped the company into the global superpower it is today.
The company came in to being in 1933 with the signing of the Oil concession agreement between Saudi Arabia and the Standard Oil Company of California (Socal). Fast forward 5 years and after half a decade of fruitless drilling finally on March 4th 1938 oil is discovered at Dammam Well No. 7. A year later the first export of Saudi crude oil was exported out of the country on the D.G Scofield, a ship named after one of the co-founders of Socal.
The first half of the 1940’s was marked with shortages of manpower and equipment as a result of World War 2 which somewhat slowed the progress made towards the end of the 1930’s. One success however came in 1941 when oil was struck at Abqaiq Well No.1 which indicated the discovery of a major new oil field. 1944 saw the Casoc name changed to the Arabian American Oil company, better known by its acronym Aramco, which by 1949 was producing oil at a rate of 500,000 bpd (barrels per day).
The 1950’s saw continued growth of the company with oil production reaching 1 million bpd annually by 1958. This decade also marked the start of the Saudi Arabian state taking more control of the company when it moved the headquarters from New York to Dhahran. The first Saudis joined the Board of Directors in 1959 marking another step towards a stronger Saudi involvement.
Jumping forward to the 1970’s now, a decade which is arguably the most important for Saudi Aramco, certainly in terms of state ownership. 1973 saw the Saudi government acquire a 25% stake in Aramco, a figure further rising to 60% the following year. In 1980 the Saudi Government acquired the remaining 40% resulting in a complete 100% Saudi state owned company.
As a result of a royal decree in 1988 another name change was enacted changing the name from the Arabian American Oil Co. to Saudi Arabian Oil Co. as it is known today. The turn of the 90’s saw the discovery of more high quality oil and gas in three areas south of Riyadh which further set the wheels in motion that ensure that Saudi Aramco is the now the world’s highest valued company.
Today the company produces 10.2 million barrels per day with plans outlined in the Saudi Vision Plan 2030 to sell around 5% of state owned company shares in order to build a large sovereign fund. Time will tell how successful these plans will be and how they will further shape the future of Saudi Aramco.