Saudi Aramco’s path from one oil well to world’s most valuable company
Saudi Arabia’s state oil producer is in a league of its own. The world’s most valuable company, which supplies about one in every nine barrels of crude produced and runs refineries from the US Gulf coast to the South China Sea, is preparing for an initial public offering to raise about $100 billion as soon as 2017.
Selling about 5 per cent of Saudi Arabian Oil Co, or Saudi Aramco, is the linchpin of a plan by Prince Mohammed bin Salman, the king’s son and influential deputy crown prince, to transform the nation’s economy to survive in a post-hydrocarbon age. Prince Mohammed plans to plough proceeds from the sale into manufacturing, high-tech industries and services to wean the Saudi economy off the crude that first flowed from a desert well in 1938.
Saudi Arabia awards its first oil-exploration concession to Standard Oil of California, now Chevron, which sets up a local subsidiary, California Arabian Standard Oil Co (Casoc), to manage an area bigger than Texas or France.
Texas Co, or Texaco, now part of Chevron, becomes a 50 per cent shareholder in Casoc.
After a string of disappointments, Casoc follows advice of its chief geologist Max Steineke to “drill deeper” and discovers first oil at Dammam No 7 well. Company makes advance payment to the government of 50,000 pounds in gold (about $250,000).
Casoc is renamed Arabian American Oil Co, known as Aramco.
Standard Oil of New Jersey and Socony-Vacuum Oil, both precursor companies of ExxonMobil, also take stakes, bringing the total number of Aramco’s shareholders to four, all of them US oil majors. Aramco discovers oil at Ghawar, world’s biggest field still today.
Seven years after buying an initial 25 per cent interest, Saudi government pays partners $1.5 billion for remaining 40 per cent of Aramco assets it doesn’t own. Company is now wholly Saudi owned.
Ali Al Naimi becomes Aramco’s first Saudi president.
Arabian American Oil Co changes name to Saudi Arabian Oil Co, also known as Saudi Aramco, and sets up its first refining and marketing joint venture, with Texaco in the US. Al-Naimi is appointed Aramco’s chief executive while continuing to serve as president.
Aramco, focused historically on exploration and production, becomes an integrated oil company when the government makes it responsible also for domestic refining, product distribution and international product marketing.
Al-Qaeda militants launch unsuccessful attack on Aramco’s Abqaiq oil-processing facility. Two security guards and two attackers are killed, and crude prices surge more than 4 per cent the same day.
With more than 60,000 employees, Aramco operates subsidiaries and affiliates in China, Japan, India, South Korea, Singapore, Egypt, the UAE, the UK, the Netherlands and the US. In April, the Saudi deputy crown prince announces plans for an IPO, with less than 5 per cent of company shares to be offered to investors in what could be the world’s largest share offering.
Follow The National’s Business section on Twitter
Updated: August 18, 2016 04:00 AM