Aramco: A pioneer in Saudization

THE CARAVAN GOES ON
HOW ARAMCO AND SAUDI ARABIA GREW UP TOGETHER
FRANK JUNGERS
PUBLISHED BY MEDINA PUBLISHING
PAPERBACK 255 PAGES 

“The Caravan Goes On” recounts the unique story of Frank Jungers, former President, Chairman and CEO of Aramco during his three decades with the company. This book not only highlights the eminent role played by Aramco in the early development of Saudi Arabia’s infrastructure and economy but it also underlines the company’s pioneering efforts in the field of Saudization.
“The resulting values that Saudis and Americans shared over the years shaped a record marked by and large by cooperation and mutual respect on both the individual level and of company-government relations. This was in sharp contrast to elsewhere in the world, where foreign-owned oil companies often had adversarial, exploitative or even colonialist relationship with their host governments.
Aramco, however, implemented a special set of well-thought-out policies, including using the best available technologies, maximizing training and the development of Saudi manpower, encouraging the creativities and respectfully observing Saudi law and customs, writes Jungers
The appointment of a Saudi geologist Ali Al-Naimi (who started as an office boy), as the first Saudi president of Aramco and chief executive officer and later Minister of Petroleum and Mineral Resources, is a perfect example of what this successful Saudization strategy achieved.
“The term Saudization is something we coined in the late 1970s, but it represents a process that has been going on for a very long time,
as evidenced by our more senior Saudi officers at Aramco. Essentially all of them have 30 or more years with the company. They began their training in the 1950s,” says John Kelberer, who was appointed chairman .
Aramco began its efforts in the 1950s to make better use of Saudis in the workforce and to integrate them more effectively in the company’s Western-style business culture. Under the wise and progressive leadership of Norman “Cy” Hardy and Thomas Barger, the company developed programs to attract and train a Saudi workforce and provide them with a lifestyle that would fit Aramco’s needs.
One particularly successful program was the Home Ownership Program which gave Saudi employees the possibility of owning a plot of land and building a house thanks to a loan payment deducted from their salaries. This popular program is still being implemented to this day.
It is interesting to know that many individuals who began working for Aramco eventually created their own businesses. Suliman Olayan started as a transportation dispatcher but when Aramco encouraged Saudis to set up their own businesses and become contractors for the company, he heeded the advice and left his job in 1947. He subsequently opened a trucking company in Alkhobar to handle the transportation for Bechtel which was building the huge Tapline oil pipeline system across northern Saudi Arabia. Other families who also left Aramco to create successful businesses include the Zamils, the Algosaibis and Ali Al-Tamimi who turned his Dammam Laundry into a multifaceted enterprise including construction services, transportation and supermarkets.
Oil transformed Saudi Arabia and its people but the transition from a nomadic to an industrial society was also due to the unique character of the Saudi desert bedouin. Frank Jungers recalls the day when the head of a local tribe was invited to witness the first test flight of a Ford Trimotor aircraft. The plane had been brought in boxes to the Kingdom from Bahrain by dhow. When the aircraft was assembled and ready to fly, everyone gathered on the beach to witness the event.
As the Trimotor rose into the air, Thomas Barger, Aramco Chairman and CEO, told the Bedouin sheikh: “Isn’t it wonderful that a machine this big can fly?”
The tribesman replied: “Isn’t that what it’s supposed to do?”
“This gives us some insight into the practical mind of the Bedu,” says Jungers.
Pragmatism was also one of King Abdulaziz Al-Saud’s many qualities. Endowed with a charismatic character, Ibn Saud, as he was also known, was a born leader who not only knew what his country needed but also had a clear vision of its future. He played a crucial role in signing the Concession Agreement with the Americans since he believed the British were not serious about the country’s prospects in oil. The proposed Concession Agreement was submitted to King Abdulaziz in May 1933. He apparently sat quietly while the 37 articles were being described giving the impression he was dozing through the reading. However, as soon as the monotonous voice of the reader stopped, the King became alert and said to his Finance Minister, Abdullah Sulaiman: “Put your trust in God and sign.”
As Aramco grew along with the Saudi government, there also grew the notion that the government should not only receive money from the oil industry, but also have a hand in running it. Under the guidance of the Deputy Crown Prince of Saudi Arabia, Mohammed bin Salman, a package of ambitious plans known as “Saudi Vision 2030” aims at decreasing the country’s dependence on petrol.
One of the main proposals of this economic plan is the sale of 5 percent of Saudi Aramco via an initial public offering (IPO). Saudi Aramco has revenues of more than $1 billion per day and it is easily the largest energy company in the world in terms of both production and company value. The main reasons behind this decision are to turn Aramco into a more commercially-driven organization, reduce political meddling and provide more leeway for the company to make commercial decisions.
It should be said that Aramco is investing up to $10 billion for the development of domestic shale gas resources. This will enable the Kingdom to use more natural gas for domestic electricity purposes, freeing up more oil for export.
The author has used many witty and interesting anecdotes which bring humor and liveliness to a subject that may seem too specialized.
This book succeeds brilliantly in showcasing the people who have contributed to create Aramco’s DNA which permeates the company’s ethic and is the key to its success since its inception in 1933.

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