Headquartered in Dhahran, Saudi Arabia Saudi Aramco operates the world's largest single hydrocarbon network, the Master Gas System. Its 2013 crude oil production total was 3.4 billion barrels (540,000,000 m3), and it manages over 100 oil and gas fields in Saudi Arabia, including 288.4 trillion standard cubic feet (scf) of natural gas reserves. Saudi Aramco operates the Ghawar Field, the world's largest onshore oil field, and the Safaniya Field, the world's largest offshore oil field.
History
Saudi Aramco's origins trace to the oil shortages of World War I and the exclusion of American companies from Mesopotamia by Great Britain and France under the San Remo Petroleum Agreement of 1920. The US Republican administration had popular support for an "Open Door policy", which Herbert Hoover, secretary of commerce, initiated in 1921. Standard Oil of California (SoCal) was among those US companies seeking new sources of oil from abroad. Through its subsidiary company, the Bahrain Petroleum Co. (BAPCO), SoCal struck oil in Bahrain in May 1932. This event heightened interest in the oil prospects of the Arabian mainland. On 29 May 1933, the Saudi Arabian government granted a concession to SoCal in preference to a rival bid from the Iraq Petroleum Co.. The concession allowed SoCal to explore for oil in Saudi Arabia.
SoCal assigned this concession to a wholly owned subsidiary, California-Arabian Standard Oil (CASOC). In 1936, with the company having had no success at locating oil, the Texas Oil Co. (Texaco) purchased a 50% stake of the concession. After four years of fruitless exploration, the first success came with the seventh drill site in Dhahran in 1938, a well referred to as Dammam No. 7. This well immediately produced over 1,500 barrels per day (240 m3/d), giving the company confidence to continue. On 31 January 1944, the company name was changed from California-Arabian Standard Oil Co. to Arabian American Oil Co. (or Aramco). In 1948, Standard Oil of New Jersey (later known as Exxon) purchased 30% and Socony Vacuum (later Mobil) purchased 10% of the company, with SoCal and Texaco retaining 30% each. The newcomers were also shareholders in the Iraq Petroleum Co. and had to get the restrictions of the Red Line Agreement lifted in order to be free to enter into this arrangemen. In 1950, King Abdulaziz threatened to nationalize his country's oil facilities, thus pressuring Aramco to agree to share profits 50/50.
A similar process had taken place with American oil companies in Venezuela a few years earlier. The American government granted US Aramco member companies a tax breakknown as the golden gimmick equivalent to the profits given to King Abdulaziz. In the wake of the new arrangement, the company's headquarters were moved from New York to Dhahran.In 1951, the company discovered the Safaniya Oil Field, the world's largest offshore field. In 1957, the discovery of smaller connected oil fields confirmed the Ghawar Field as the world's largest onshore field
In 1973, following US support for Israel during the Yom Kippur War, the Saudi Arabian government acquired a 25% stake in Aramco. It increased its shareholding to 60% by 1974, and finally took full control of Aramco by 1980, by acquiring a 100% stake in the company.
Aramco partners continued to operate and manage Saudi Arabia's oil fields. In November 1988, a royal decree changed its name from Arabian American Oil Co. to Saudi Arabian Oil Co. (or Saudi Aramco) and took the management and operations control of Saudi Arabia's oil and gas fields from Aramco and its partners. In 1989–90, high-quality oil and gas was discovered in three areas south of Riyadh—the Raghib area about 77 miles southeast of the capital.
In 2005, Saudi Aramco was the world's largest company with an estimated market value of $781 billion. In 2011, Saudi Aramco started production from the Karan Gas Field, with an output of more than 400 million scf per day. In January 2016 the Deputy Crown Prince of Saudi Arabia, Mohammad bin Salman Al Saud, announced he was considering listing shares of the state-owned company, and to sell around 5% of them in order to build a large sovereign fund.
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