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Saudi Arabia’s Aramco takeover

Saudi Arabia’s Aramco takeover
Aramco began the 1970s as an American-owned company, but by the end was fully owned by the Kingdom. (Alamy)
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Updated 02 May 2020

Saudi Arabia’s Aramco takeover

Saudi Arabia’s Aramco takeover

Saudi Arabia’s gradual acquisition of Aramco by 1980 guaranteed its future success

Summary

Aramco began the 1970s as an American-owned company, but by the end was fully owned by the Kingdom, and was a vital part of its economy and the global energy industry. The transformation — achieved without the upheaval that many other Middle East countries suffered through oil industry nationalization — was the start of the process that culminated in last year’s successful initial public offering as the most valuable company in history. It has proved to be a defining event in Saudi history.

DUBAI: The 1970s was the decade in which, in the words of one of the leading policymakers of the era, Saudi Arabia became “masters of our own commodity” — the owner and operator of its gigantic oil industry, with all that meant for the economic development of the Kingdom and the wellbeing of its citizens.

The decade began with the Arabian American Oil Co. — a consortium of four US oil giants, holding an exclusive concession to develop Saudi Arabia’s most precious resource; it ended with an agreement to create Saudi Aramco, owned and operated by the Saudi government as the leading force in Middle East and global energy markets.

By 1980, Aramco was set on the path that enabled it, nearly four decades later, to become the most valuable company in history, in the biggest ever sale of shares on a stock exchange with last year’s record-breaking initial public offering on Saudi Arabia’s Tadawul.

But — and this is crucial to understanding the events of the 1970s — the process by which the Kingdom acquired ownership of Aramco was unlike many of the fractious confrontations in the Middle East oil industry in that era.

Whereas countries such as Libya, Iraq and Iran had simply confiscated American assets without compensation, leading to instability in global energy and geopolitics, Saudi Arabia negotiated the purchase of shares from the US owners in a gradual process that ensured good relations between the two countries. In the case of the Kingdom, the process was called “participation” rather than “nationalization.”

Key Dates


  • 1

    Saudi Arabia signs an oil concession with the Standard Oil Co. of California (SOCAL), and its subsidiary CASOC begins to survey for oil.

    Timeline Image May 1933


  • 2

    Commercial oil production begins from Dammam No. 7.

    Timeline Image March 3, 1938


  • 3

    CASOC’s name is changed to Aramco (the Arabian American Oil Co.).


  • 4

    Ali Al-Naimi, who worked his way up through the oil company from office boy to president, becomes the first Saudi CEO, and the company is renamed Saudi Aramco.

    Timeline Image 1988


  • 5

    Drones attack Saudi Aramco’s facility in Abqaiq and Khurais, temporarily interrupting production. Both the US and Saudi Arabia say Iran was behind the attack.

    Timeline Image Sept. 14, 2019


  • 6

    Saudi Aramco shares rise 10 percent above its IPO price in its stock market debut, becoming the most valuable listed company in history.

    Timeline Image Dec. 11, 2019

Ali Al-Naimi — then a rising star in the Aramco establishment, who later became its first Saudi president — encapsulated the era in his autobiography “Out of the Desert”: “The fact that the transfer didn’t involve an overnight nationalization of assets, as happened in several oil-producing countries, was a tribute to the sound judgement and good negotiating faith on the part of the country as well as the oil company owners.”

The man at the sharp end of the negotiations was a young lawyer who had been fast-tracked by King Faisal into high government office. Ahmed Zaki Yamani — author of the “masters of our own commodity” quote — was petroleum minister in 1968 when he told an oil conference in Beirut that it was the Kingdom’s ambition to acquire 50 percent of Aramco from its American owners. The number would change as the decade wore on, but the ambition remained the same: To get control of Aramco.

At 8 a.m. yesterday Saudi Aramco was a $1.7 trillion company. Thirty minutes later the oil giant was worth nearly $1.9 trillion as it made its debut on the Tadawul, the Saudi stock market in Riyadh.

From a story by Rashid Hasan on the front page of Arab News, Dec. 12, 2019

As Arab News columnist Ellen Wald wrote in “Saudi Inc.,” her recent history of Aramco: “It was a matter of what was in the best interests of Saudi Arabia and what he (Yamani) could convince the Americans was in their interest as well.”

By the early 1970s, Saudi Arabia was a strong weight in the global energy balance. Demand for oil was booming, and American oilfields were not able to meet it. Saudi Arabia was spoken of for the first time as the “swing” exporter, the most important producer with capacity and reserves to help meet global demand at the turn of a pump wheel.

At a meeting of the Organization of the Petroleum Exporting Countries (OPEC) in Vienna in 1972, Yamani was presented with an offer by the Americans to purchase 20 percent, some way off his initial demand for half of Aramco. But negotiations eventually led to agreement that Saudi Arabia would buy 25 percent, and eventually 51 percent. Control had been ceded — in principle — by the Americans.




A page from the Arab News archieve showing the news on Dec. 12, 2019.

At the same OPEC venue the following year, the process was accelerated by external events. The 1973 war between Israel and Arab countries broke out just before the oil ministers arrived in Austria, and the meeting was conducted in emergency conditions. As oil historian Daniel Yergin described in his Pulitzer Prize-winning book “The Prize”: “The three decade old postwar petroleum order had died its final death.”

Arab countries, led by the largest oil producer Saudi Arabia, hiked the price of oil dramatically — to more than double the $5 per barrel it had been selling at previously. More significantly, it cut production and imposed an embargo on countries, including the US, which were supplying Israel with military equipment to fight the war.

By the early 1970s, Saudi Arabia was a strong weight in the global energy balance.

Frank Kane

The resulting turmoil in global economies and energy markets changed everything. By 1976, power had moved inexorably away from the independent oil companies to the producers, led by Saudi Arabia.

At a meeting in Panama that year, Yamani was in no mood to delay any longer. The Kingdom wanted a commitment from the Americans to sell all their remaining shares. By mid-March the deal was done, effective 1980, and Saudi Aramco was officially renamed eight years later.

The price that the Kingdom paid for the shares was never revealed, but speculation at the time suggested that around $2 billion passed hands. Last December, publicly listed Aramco was valued on Tadawul at roughly 1,000 times that.

Wald told Arab News: “The real reason Aramco was able to become the successful company it is today is that once it became a Saudi firm, the oilmen continued to control it and its money, as opposed to government bureaucrats. This was unique among national oil companies.”

  • Frank Kane has written about the oil industry in the Middle East for the past 15 years, the last three as senior business columnist for Arab News.


Egypt jobless rate rises amid pandemic second wave

Egypt jobless rate rises amid pandemic second wave
Updated 7 min 21 sec ago

Egypt jobless rate rises amid pandemic second wave

Egypt jobless rate rises amid pandemic second wave
  • The size of the workforce was estimated at 29,284 million, compared to 29,965 million during the previous quarter

RIYADH: Egypt’s unemployment rate reached 7.4 percent of the total labor force in the first quarter of 2021 — up from 7.2 percent in the previous quarter.
The new data from the Central Agency for Public Mobilization and Statistics (CAPMAS), reflects the impact of the second wave of the pandemic.
The size of the workforce was estimated at 29,284 million, compared to 29,965 million during the previous quarter, representing a decrease of 2.3 percent, Al Arabiya reported.
The labor force in urban areas reached 13,034 million, with 16,250 million living in rural areas.
Gehan Saleh, economic affairs adviser to Egypt’s prime minister said in April that the second stage of the country’s economic reform program would be launched soon.
She said the plan aims to improve the quality of life of citizens and tackle unemployment through job-creating investments.


Smugglers post gold from Dubai to India hidden in Tang

Smugglers post gold from Dubai to India hidden in Tang
Updated 29 min 57 sec ago

Smugglers post gold from Dubai to India hidden in Tang

Smugglers post gold from Dubai to India hidden in Tang
  • It is the latest ruse by smugglers trying to avoid hefty import duties for the precious metal by employing increasingly intriguing methods

DUBAI: Indian customs have foiled an attempt to post gold from Dubai disguised in containers of the popular Tang drink.

After sieving the contents of the drink mix, Chennai customs officials discovered it had been mixed with gold granules, according to a statement from the Commissioner of Customs at Chennai International Airport.
Officials probing the racket found that the address of the receiver had been misused.
It is the latest ruse by smugglers trying to avoid hefty import duties for the precious metal by employing increasingly intriguing methods.
Earlier this year officials at Chennai airport also nabbed two men trying to smuggle gold through the airport underneath their wigs.
The hapless pair were nabbed after their unusual hairstyles caught the attention of officials.

They were found to be carrying two gold paste packets weighing almost 700 g


Review: Kate Winslet exudes quiet brilliance in sleuthing series ‘Mare of Easttown’

Kate Winslet shines in this small town murder mystery. (Supplied)
Kate Winslet shines in this small town murder mystery. (Supplied)
Updated 45 min 7 sec ago

Review: Kate Winslet exudes quiet brilliance in sleuthing series ‘Mare of Easttown’

Kate Winslet shines in this small town murder mystery. (Supplied)

CHENNAI: British actress Kate Winslet has dabbled in period pieces, rom-coms, dramas and everything in between, but in her latest outing in “Mare of Easttown,” a series streaming on OSN in the Middle East, she absolutely dazzles as a detective in a small, conservative town in Pennsylvania.

In bleak, deprived small-town America, everybody knows everybody and working as a cop is not easy for Winslet’s character Mare Sheehan.

Mare, who rarely smiles but is not grumpy or snappy, carries her own demons. She is tired and weighed down by grief over a family tragedy. Add to the mix a wayward ex-husband (played by David Denman) and a cagey daughter (Angourie Rice), and it seems her personal life is enough to fill a drama series on its own.

But this is a murder mystery, and soon our protagonist is faced with the unsolved case of a 19-year-old missing girl and more. The girl had been gone for a year, and her mother is a friend of Mare’s, which makes it difficult and personal for the detective. And it seems like a hard bolt from the blue when Erin (Cailee Spaeny), a single teenage mother, is found dead in the woods one night after townsfolk had gathered for a party.

The people of Easttown, used to leading uneventful lives, are not pleased with the ramped up police presence — including the intrusion of a county detective, Colin Zabel (Evan Peters) who is brought in to assist Mare — and it is into this tense atmosphere that Brad Ingelsby, who created and wrote the series, tweaks the formula to add a romantic angle.

Mare meets writer and guest lecturer Richard Ryan (an intelligent, witty and charming Guy Pearce), who is visiting the town.

The writer turns “Mare of Easttown” from what could have been a dull and boring story into something that leaves us thirsting for more at the end of each twisting episode, where every detail matters.

It is a fantastic study in both police work and, more interestingly, the effect a brutal crime has on a community. The series is ably led by director Craig Zobel, who builds a convincing narrative style.

Of course, his eyes are on the star of the series, and it is remarkable to see Winslet so engaging.


Arab League, Muslim World League condemn Israeli attacks against Palestinians

Arab League, Muslim World League condemn Israeli attacks against Palestinians
Updated 48 min 45 sec ago

Arab League, Muslim World League condemn Israeli attacks against Palestinians

Arab League, Muslim World League condemn Israeli attacks against Palestinians
  • Aboul Gheit called on the international community to act immediately to stop the violence
  • The Muslim World League has strongly condemned the attacks at Al-Aqsa Mosque

CAIRO: The head of the Arab League condemned on Tuesday deadly Israeli air strikes on the Gaza Strip as “indiscriminate and irresponsible” and said Israel had provoked an earlier escalation in violence by its actions in Jerusalem.
“Israeli violations in Jerusalem, and the government’s tolerance of Jewish extremists hostile to Palestinians and Arabs, is what led to the ignition of the situation in this dangerous way,” Arab League chief Ahmed Aboul Gheit said in a statement.
The attacks in Gaza were a “miserable show of force at the expense of children’s blood,” he said.
Aboul Gheit called on the international community to act immediately to stop the violence, saying continuing “Israeli provocations” were an affront to Muslims on the eve of the Eid holiday at the end of the holy month of Ramadan.
Arab League foreign ministers are holding a virtual meeting on Tuesday to discuss the situation in Jerusalem.
Meanwhile, the Muslim World League has strongly condemned the attacks at Al-Aqsa Mosque, it said in a statement.
The organization, issued Tuesday went on to say that it rejected the escalations against worshippers.
Mohammed bin Abdul Karim Al-Issa, secretary-general of the Muslim World League further denounced all acts of violence that undermined the dignity and rights of the Palestinian people, as well as provoking the feelings of Muslims around the world.
Al-Issa called on the International community to put an end to the violence, preserve the right of the Palestinian people, provide the necessary protection of civilians, guarantee their right to practice their religion, and stop all violations and attacks.
He also reiterated the affirmation of standing by the Palestinian people. He said he supports all peace efforts to reach a just and comprehensive solution to the Palestinian issue.
He also said the solution should allow Palestinians to establish their independent state on the 1967 borders, with East Jerusalem as their capital, in accordance with international legitimacy decisions and the Arab Peace Initiative.
Health officials in Gaza said at least 20 people, including nine children, were killed.


US actress, mogul Jessica Alba shows off Arab labels in New York

Jessica Alba showed off a pair of earrings by Lebanese-Brazilian fine jeweler Ana Khouri. (Getty Images)
Jessica Alba showed off a pair of earrings by Lebanese-Brazilian fine jeweler Ana Khouri. (Getty Images)
Updated 37 min 3 sec ago

US actress, mogul Jessica Alba shows off Arab labels in New York

Jessica Alba showed off a pair of earrings by Lebanese-Brazilian fine jeweler Ana Khouri. (Getty Images)

DUBAI: US actress and business mogul Jessica Alba showed off a pair of dainty heels by Lebanese designer Andrea Wazen and accessories by part-Arab jewelry designer Ana Khouri while out and about in New York last week.

The actress — who is also the co-founder of the billion-dollar home care business The Honest Company — was in New York to visit NASDAQ headquarters for the IPO of her company.

Later, she was spotted walking in Manhattan and even appeared on “The Tonight Show Starring Jimmy Fallon” wearing a pair of dainty rose-colored mules by Wazen.

Alba showed off the Denver mesh mules in pink, which feature a translucent upper, thin ankle strap and elegant pointed toe shape. The heels complemented a dark sage green bag by Celine and a greige trench coat-and-sheath dress combination.

The entrepreneur and actress wore a pair of pink heels by Andrea Wazen. (Getty Images)

Wazen isn’t the only Arab designer Alba flaunted while out and about in New York. She attended the IPO of her company wearing chunky gold statement earrings by Lebanese-Brazilian fine jeweler Ana Khouri. 

New York-based Khouri has seen her pieces worn by everyone from Nicole Kidman and Charlize Theron to Karlie Kloss and Alicia Vikander.

Wazen is also no stranger to celebrity fans, and has seen her designs sported by the likes of actress Gabrielle Union-Wade, model Ashley Graham, Katy Perry, Kylie Jenner and Jennifer Lopez during her “It’s My Party World Tour” in 2019.

The shoe designer is fresh off a win at the Footwear News (FN) Achievement Awards in December, nabbing the Emerging Talent prize.

“What a feeling… I cannot explain the joy and satisfaction I am feeling,” she wrote at the time, before thanking Michael Atmore, chief brand officer and the director of the event, for recognizing her as this year’s emerging talent, stylist Jill Jacobs for presenting her with the award and her team, who she said she couldn’t have “accomplished any of this” without.

“Last but not least, I would like to dedicate this award to my beautiful city, my source of inspiration and my home Beirut,” she wrote.