Aramco

Where energy is opportunity

Aramco is one of the world's leading producers of the energy and chemicals, officially known as the Saudi Arabian Oil Company. Founded in 1933, the business traces its roots to the discovery of oil in the Eastern Province of Saudi Arabia. It has played a pivotal role in the development of the Saudi economy and the global energy industry. Over the years, it has evolved from a small exploration venture into a global energy powerhouse.

In the sun-baked deserts of Saudi Arabia lies a treasure trove of liquid gold. This is the home of Saudi Aramco. As the largest oil company in the world, Aramco as it is now known, is a titan whose story is deeply intertwined with the history of modern Saudi Arabia and the global energy landscape.

It is the world’s largest oil company, one of the world’s largest companies by market cap, generating annual profits equal to the combined totals of Amazon, Nvidia, and Meta.

It is also the single most contributing force behind Saudi Arabia’s rise to power. Its control over global oil supplies has made it a key player in international politics, shaping global energy dynamics through crises and conflicts.

Aramco’s vision is to be “the world’s preeminent integrated energy and chemicals company, operating safely, sustainably, and reliably”. And its mission, “to strive to provide reliable, affordable, and sustainable energy globally while delivering value to shareholders.”

Liquid gold

Aramco’s roots trace back to the 1930s when the Arabian Peninsula was a landscape of nomadic tribes and a few scattered towns. The world was already aware of the potential of oil, but no one was certain of the riches lying beneath the Arabian sands. That was until geologists from Standard Oil of California (SoCal) arrived in 1933 with a bold concession from the Saudi government to explore for oil.

SoCal’s venture into the Arabian Peninsula was far from guaranteed success. The Arabian landscape was harsh and unforgiving, with extreme heat and little infrastructure. The first geologists who arrived faced not only the natural challenges but also the skepticism of many who doubted that oil could be found there. Despite the many skeptics, the team established their base in Dhahran, a small coastal area that would eventually become the epicenter of Saudi Arabia’s oil industry.

Over the next five years, the search for oil was fraught with disappointment. The initial wells drilled by SoCal’s geologists came up dry, one after another. There was a growing sense of frustration and doubt, not just among the workers in the field, but also back in the United States, where SoCal’s management began to question the viability of the entire operation. This situation is reminiscent of the Norwegian government’s discovery of the Ekofisk oil field in 1969 after four years of exploration and setbacks. That discovery eventually led to one of the country’s most valuable assets, which became the backbone of Norway’s sovereign wealth fund – the largest sovereign wealth fund in the world​​.

The first years were met with disappointment. After drilling a series of dry wells, SoCal’s geologists were on the verge of giving up. But in 1938, persistence paid off when they struck oil at Well No. 7 in Dhahran. This well, later named the “Prosperity Well,” marked the beginning of a new era for Saudi Arabia and the world. The company, initially named the California Arabian Standard Oil Company, would evolve into the Arabian American Oil Company, or Aramco, and eventually into Saudi Aramco after Saudi Arabia took full ownership in 1980.

Geopolitics and partnerships

The story of Aramco is as much about geopolitics as it is about oil. The company initially operated as a partnership between the Saudi government and a consortium of American companies, including Standard Oil of California (which later became Chevron), Texaco (now owned by Chevron), and Exxon Mobil. This partnership was instrumental in shaping the modern Saudi state, providing the funds needed to transform the Kingdom from a desert backwater into a modern nation.

Aramco’s operations were not just confined to extracting oil. The company built entire communities from scratch, including the city of Dhahran, which became the epicenter of the oil industry in Saudi Arabia. Aramco introduced modern amenities, built schools and hospitals, and even brought baseball to the desert, reflecting its strong American heritage.

One of the most fascinating stories about Saudi Aramco is the discovery and development of the Ghawar oil field in 1948. Stretching over 174 miles, Ghawar is the largest conventional oil field in the world, producing millions of barrels of oil daily at its peak. For decades, Ghawar has been the beating heart of Saudi Aramco, generating more wealth than perhaps any other single natural resource in history.

The sheer scale of Ghawar is mind-boggling. It is said that if Ghawar were a country, its oil production would rank among the top 10 in the world. The field has produced more than 65 billion barrels of oil since its discovery and is still a critical asset in Aramco’s portfolio. The story of Ghawar is one of engineering marvels, as Aramco’s engineers have employed cutting-edge technology to maintain its output, even as the field matures.

Over the decades, Saudi Aramco has faced numerous challenges, from navigating global oil shocks to adapting to changing geopolitical landscapes. One significant moment was the 1973 oil embargo, during which Arab oil producers, including Saudi Arabia, drastically cut exports to the West in response to U.S. support for Israel in the Yom Kippur War. This event not only quadrupled oil prices but also demonstrated the immense power Saudi Arabia wielded over global energy markets.

As the years passed, Saudi Aramco evolved from an oil extraction company into an integrated energy giant, investing in refining, petrochemicals, and alternative energy sources. In 2019, Aramco made headlines with its IPO, the largest in history, raising $25.6 billion at a $1.7 trillion valuation. This IPO was part of Saudi Arabia’s Vision 2030 plan, an ambitious blueprint to diversify the Kingdom’s economy away from its dependence on oil.

Future growth

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