Saudi Aramco

• 1. Introduction

  ›

  Saudi Aramco is, by almost any measure, the most consequential company on earth. It sits on more proven crude oil reserves than any other firm, produces more oil each day than any rival, and in 2022 posted profits of $161 billion, figures that dwarfed what ExxonMobil and Shell reported that same year. Yet its origins stretch back not to the kingdom of Saudi Arabia but to a California boardroom, an American policy dispute, and a single well drilled on Saudi soil after years of futile searching. How did a concession granted to a California oil company in the 1930s become the national oil company of one of the world's most powerful states? How did a firm founded on foreign capital and American expertise end up almost entirely in Saudi hands, with a Saudi president, a Saudi workforce, and a mandate to shape the global price of oil? And what does it mean that this one company, in 2024 alone, was responsible for more carbon dioxide emissions than any other entity on the planet?

• 2. California to the Desert

  ›

  Standard Oil of California, known as SoCal, began searching beyond American borders in the 1920s after the United Kingdom and France shut American companies out of Mesopotamia under the San Remo Petroleum Agreement of 1920. Herbert Hoover, then secretary of commerce, pushed back with an Open Door policy starting in 1921, and SoCal was among the companies that moved to take advantage. In 1932, a SoCal subsidiary called the Bahrain Petroleum Company struck the first oil field in the Persian Gulf outside of Iran. That find pointed to promise just across the water, and the Saudi Arabian government granted SoCal a concession to explore, passing over a rival bid from the Iraq Petroleum Company. SoCal assigned the rights to a wholly owned subsidiary called the California-Arabian Standard Oil Company, known as CASOC. By 1936, with no oil found, the Texas Company purchased a 50% stake. Four more years of fruitless drilling followed before the seventh drill site, a well called Dammam No. 7 in Dhahran, came in during 1938, immediately producing more than 1,500 barrels per day. On the 31st of January 1944, the company was renamed Arabian American Oil Company, or Aramco. By the 17th of March 1947, Standard Oil of New Jersey and Socony Vacuum had each bought in as well, taking 30% and 10% respectively, with SoCal and Texaco each retaining 30%. Joining required both newcomers to have the restrictions of the Red Line Agreement lifted, since they were already shareholders in the Iraq Petroleum Company.

• 3. Nationalisation and the Yom Kippur Turn

  ›

  In 1950, King Abdulaziz threatened to nationalise Saudi Arabia's oil facilities, a move that pressured Aramco into a 50-50 profit-sharing arrangement. The American government softened the blow for US member companies with a tax break that became known as the golden gimmick, equivalent in value to the profits now flowing to the king. In the same period, company headquarters moved from New York to Dhahran. The 1951 discovery of the Safaniya Oil Field, the world's largest offshore field, and the 1957 confirmation of the Ghawar Field as the world's largest onshore field, made the stakes of any ownership dispute enormous. The decisive shift came after the Yom Kippur War of 1973. Following American support for Israel, the Saudi government acquired a one-quarter participation interest in Aramco's assets that year, then raised its stake to sixty percent in 1974. Aramco continued managing the assets on behalf of the Saudi government until 1988, when a royal decree in November of that year created the Saudi Arabian Oil Company to take formal control. Discovery of high-quality oil and gas in three areas south of Riyadh followed in 1989-90, arriving just as the ownership transition was completed.

• 4. The Gulf War and the Asian Pivot

  ›

  September 1990 placed extraordinary demands on Aramco almost immediately after its nationalisation was formalised. The embargo of Iraq and occupied Kuwait removed a significant portion of global supply, and Aramco was expected to produce an extra 4.8 million barrels per day to stabilise world markets. The company also had to supply all coalition aviation and diesel needs. Aramco recommissioned 146 mothballed wells at Harmaliyah, Khurais, and Ghawar, along with associated gas separation plants and saltwater treatment pipelines, in a three-month effort. Daily production climbed from 5.4 million barrels per day in July to 8.5 million barrels per day by December 1990. That same year, Aramco began expanding crude oil sales in Asia, reaching agreements with South Korea, the Philippines, and China. By 2016, roughly 70% of Aramco's crude oil sales went to Asian buyers, a reorientation that reshaped the company's commercial identity as thoroughly as nationalisation had reshaped its political one.

• 5. Saudization

  ›

  Article 23 of the original concession agreement required that Americans direct and supervise operations, but that Saudi nationals be employed as far as practicable. The first company school opened in May 1940 in the Al-Khobar home of Hijji bin Jassim, the company's interpreter and translator, who also served as its first instructor. A second school opened in Dhahran in 1941, called the Jebel School, where boys hired into entry-level jobs attended four hours of class beginning at 7 AM, then worked four more hours in the afternoon. By 1950, Aramco was running schools for 2,400 students. In 1959, it sent the first cohort of Saudi students to university in the United States. In 1965, Zafer H. Husseini became the first Saudi manager; in 1974, Faisal Al-Bassam became the first Saudi vice president. Ali Al-Naimi, one of the early students, was named the first Saudi president of Aramco in November 1983, and became CEO in 1988, the same year Hisham Nazer became the first Saudi chairman. Al-Naimi later credited Thomas Barger as the leader whose vision did the most to support Saudi employee training in its earliest days. By 1987, nearly two-thirds of Aramco's 43,500-person workforce were Saudi nationals, up from 1,600 Saudis employed in 1943. The Shaybah oil field came on line in July 1998 after a three-year effort by a team that was 90% Saudi, a moment Al-Naimi described as the pinnacle of Saudization.

• 6. Cyber Attack and Physical Strikes

  ›

  On the 15th of August 2012, a virus struck Aramco's computer systems. The following day the company stated that none of the infected machines were connected to the network tied directly to oil production. A group calling itself the Cutting Sword of Justice claimed responsibility for hitting 30,000 Saudi Aramco workstations and forcing the company to spend months restoring services. The malware used was identified as Shamoon, described by computer security specialists as capable of wiping files and rendering multiple computers on a network unusable. Security researcher Chris Kubecka, who helped Aramco rebuild its security posture after the attack, detailed the incident's sophistication in her presentation at Black Hat USA in 2015 and in episode 30 of Darknet Diaries. Richard Clarke suggested the attack was part of Iranian retaliation for American involvement in Stuxnet. Physical attacks followed years later. On the 14th of September 2019, drones struck the Abqaiq oil processing facility and the Khurais oil field, with Houthi rebels claiming responsibility. The attack cut 5.7 million barrels per day from Saudi crude output, removing more than 5% of the world's supply and prompting discussion among Saudi officials about postponing the company's forthcoming IPO.

• 7. The IPO and the Market

  ›

  On the 9th of April 2019, Aramco issued bonds totalling US$12 billion, and its first international bond offering attracted more than US$100 billion in orders from foreign investors, breaking all records for an emerging market bond issue. The IPO itself was a years-long process shadowed by concerns about corporate structure, the drone attacks, and questions about how much of the company the Saudi government was willing to expose to public scrutiny. On the 3rd of November 2019, Aramco announced it would list 1.5% of its value on the Tadawul exchange. A 600-page prospectus followed on the 9th of November, noting that up to 0.5% of shares were reserved for individual retail investors. On the 4th of December 2019, the offering was priced at 32 Saudi riyals per share. Total subscriptions reached US$119 billion, representing 456% of the shares on offer. The IPO raised US$25.6 billion, surpassing the Alibaba Group's 2014 offering to become the world's largest IPO. Trading began on the 11th of December 2019, with shares rising to 35.2 riyals on the first day, giving Aramco a market capitalisation of about US$1.88 trillion. By May 2022, Saudi Aramco briefly became the world's single most valuable listed company, surpassing Apple. As of November 2025, the stock trades at 25.8 riyals, giving it a market capitalisation of US$1.68 trillion, representing a fall of roughly US$800 billion from a 2022 peak that the source describes as one of the largest decreases in corporate history.

• 8. Scale, Cost, and Carbon

  ›

  Producing each barrel of oil costs Aramco $3.75, placing it among the lowest-cost producers of any oil or gas firm in the world. Saudi Arabia's broader production cost is around $10 per barrel, compared with roughly $40-60 per barrel in Canada and the United States. In 2024, Aramco's total oil production reached 12.7 million barrels of oil equivalent per day, and the company manages more than one hundred oil and gas fields, including 288.4 trillion standard cubic feet of natural gas reserves. The Master Gas System, the world's largest single hydrocarbon network, traces back to a 1975 plan to stop flaring associated gas and use it to generate power instead; by 1985 the system also handled non-associated gas from the Khuff Formation, a limestone layer 650 metres below the oil-producing Arab Zone, and by 1994 its capacity had grown to 9.4 billion standard cubic feet per day. Set against that scale is a carbon account that is equally large. In 2024, Saudi Aramco was responsible for more CO2 emissions than any other entity, accounting for 1,653 megatons, or 4.28% of global CO2 emissions for that year. Since beginning operations, the company has emitted 59.26 billion tonnes of CO2 equivalent, representing 4.38% of worldwide anthropogenic emissions since 1965. In December 2024, Aramco signed an agreement with SLB and Linde to build a carbon capture and storage project in Jubail; Aramco will own 60% of that project, with the first phase targeted for completion by the end of 2027 and designed to capture and store up to 9 million metric tons of CO2 each year.