page_title: Saudi Aramco
section_title: History
hierarchical_section_title: Saudi Aramco / History
caption_attribution_description: English: Aramco compound in Saudi Arabia 1954
context_page_description: Saudi Aramco, officially the Saudi Arabian Oil Company, is a Saudi Arabian multinational petroleum and natural gas company based in Dhahran, Saudi Arabia.
  It is one of the largest companies in the world by revenue. Saudi Aramco has both the world's second-largest proven crude oil reserves, at more than 270 billion barrels, and largest daily oil production of all oil producing companies.
  On 11 December 2019, the company's shares commenced trading on the Tadawul stock exchange. The shares rose to 35.2 riyals, giving it a market capitalisation of about $1.88 trillion, and surpassed the $2 trillion mark on the second day of trading.
  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, and it manages over one hundred oil and gas fields in Saudi Arabia, including 288.4 trillion standard cubic feet 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.
  On 9 April 2019, Aramco issued bonds collectively valued at US$12 billion.
context_section_description: Saudi Aramco's origins trace to the oil shortages of World War I and the exclusion of American companies from Mesopotamia by the United Kingdom and France under the San Remo Petroleum Agreement of 1920. The US administration at the time 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 arrangement.
  In 1949, ARAMCO had made incursions into the Emirate of Abu Dhabi (now part of the UAE), leading to a border dispute between Abu Dhabi and Saudi Arabia.
  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 break known 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 1975, the Saudi Arabia second five-year economic plan included a Master Gas Plan. Natural gas would be used to generate power, rather than flaring the gas. The plan counted on using the associated gas, but by 1985, Aramco was able to include a billion standard cubic foot per day (Bscfd) of non-associated gas. This non-associated gas was produced from the Kuff Formation, which is a limestone 650 m below the oil producing Arab Zone. In 1994, Aramco discovered more non-associated gas in the deeper Jawf sandstone formation, and built plants in Hawiyah and Haradh to process it. This increased the capacity of the Master Gas System to 9.4 billion scfd.
  In 1973, following US support for Israel during the Yom Kippur War, the Saudi Arabian government acquired a 25% "participation interest" in Aramco's assets. It increased its participation interest to 60% in 1974 and acquired the remaining 40% interest in 1976. Aramco continued to operate and manage the former Aramco assets, including its concessionary interest in certain Saudi Arab oil fields, on behalf of the Saudi Arab Government until 1988. In November 1988, a royal decree created a new Saudi Arab company, the Saudi Arabian Oil Company, to take control of the former Aramco assets (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 were discover
caption: Aramco compound in Saudi Arabia, 1954
exif: {}