ABSTRACT
This brief case history of the Arabian American Oil Company (Aramco) in Saudi Arabia provides some interesting contrasts in foreign company—host government relations in comparison with the two previous case studies. Saudi Arabia is a traditional monarchy. Although some anti-foreign company attitudes exist, both within and outside the Saudi Arabian government, Saudi Arabia has had a relatively free hand in pursuing a policy of maximizing revenues from its oil resources without the encumbrance of ideological constraints or motivations. This “bread and butter” bargaining posture has been reinforced by the impracticality of a primitive economy seriously entertaining ideas of a nationalized petroleum industry, on the one hand, and by the strong competitive position of Arabian oil, on the other. Rapid growth in output (see table 71) has been accompanied by rapidly rising returns to both the government and Aramco, and both parties have been guided to a substantial degree by the joint maximizing principle. Nevertheless, the government’s Aramco's Production of Crude Oil, Selected Years
Year |
No. of barrels (in thousands) |
---|---|
1938 |
495 |
1940 |
5,074 |
1945 |
21,310 |
1950 |
199,546 |
1960 |
456,453 |
1965 |
739,077 |
1967 |
948,110 |