Our Partner in Oil
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Author: The Reader’s Digest (December 1947)
Released 5 May 2006
Yankee businessmen and the “Lion of the Desert” are making the Golden Rule pay dividends
The Arabian American Oil Company, which may mushroom into the world’s greatest oil organization, has sole rights in Saudi Arabia to what may be the world’s greatest oil pool. In developing this concession, Aramco is, which tact and consideration, building a proud new model of enlightened American commercial development. As a keystone to its policy, it maintains a large “Relations Department” (under Vice-President Floyd Ohlinger, whom King Ibn Saud calls “my son”).
Some voices – Russian accents among them – cry, “American imperialism.” Arab voices don’t. Ibn Saud, who received me in his desert capital of Riyadh, said “We know Aramco better than others do. I shall protect it as if it were my most valuable subject.”
To win such warm tribute, Aramco has labored long and earnestly. During my stay in Arabia I sometimes wondered whether it is a working oil company or an American-Arabian friendship society.
The company, however, makes no claim to philanthropy. Its senior vice-president, British-born, American-naturalized James MacPherson, told me: “We believe that, if we help the Arabs help themselves, we’re helping ourselves, too, in the long run. We’re thinking in terms of generations, I’ll be dead in the year 2005, when this concession is due to expire, but we want the company to keep it, and the only sensible way to do this is to work with the Arabs as friends and partners.”
For years American oil companies considered drilling in the Arabian desert, but either they were too wary to risk the large sums necessary or they actually lacked the money. Then, in 1933, King Ibn Saud granted this concession to the Standard Oil Company of California, and in 1936 the Texas Company bought a half interest. In 1938 the first successful well was brought in.
Other foreign companies evidenced interest in oil development, but Ibn Saudi insisted on only Americans. “I prefer Americans,” he is reported to have said. “For one thing, you are so far away.”
Many Arabs, distrustful of foreigners, objected to letting us in. I recently asked the King: “Are any of your people still afraid of us?”
“No,” he replied. “People are afraid of the unknown. Now they have discovered that the foreigners they once feared have become helpful friends.”
To play ball with the Arabs, Aramco has done everything but turn Moslem. Aramco’s 2000 American employees observe Friday, the Moslem Sabbath, as the day of rest. On other days, work stops three times while Arab workers pray and bow toward Mecca; the company provides places to pray and to wash beforehand. Bells, brought from America for company schools, were discarded because they offend Moslems, who associate them with Christian churches.
Perhaps Aramco’s shrewdest move was to offer a free course in Arabic (soon to be compulsory) to all American employees and their families. The Arabs, a people who appreciate a gracious gesture, are delighted to hear Americans speaking their tongue. Americans get to know and like the Arabs in a way impossible with mere sign language. Friction, often caused by misunderstanding, has decreased.
In a land where education is as rare as rain, Aramco’s schools for Arabs gleam like green oases. The company picks promising young Arabs from eight to 18 and gives them a three-year course in Arabic, English, arithmetic, health and safety. Sometimes it pays them just to go to school, sometimes gives them part-time jobs.
Adult Arabs on the company payroll can attend these “opportunity schools” free. Aramco plans an elaborate six-year course for 500 young Arabs, feeding, housing and clothing them free. After that, they will go to a company trade school and learn whatever jobs they like. Some probably will be sent to America for advanced study.
These free schools are sound business. It costs Aramco about $3000 for each American worker brought here. And to keep him in Arabia, satisfied, the company must pay high wages and furnish superb living quarters. So it is developing a reservoir of trained Arabs to take over every possible job. Both the country and Aramco benefit.
In the next five years the company plans to spend $26,000,000 for new brick dormitories with modern plumbing, kitchens and ceiling fans. At present, Arab employees live in company-built barrastis, native shelters made of palm leaves and gypsum. Already the desert grapevine is humming with tales of the new “palaces”.
Arabia has only three inches of rainfall a year and virtually no streams at all. Yes deep under her sandy crust there is water, and today, after thirsty centuries, Aramco’s drilling equipment is bringing it up. Aramco water wells now dot Arabia and will increase rapidly. In one great patch of Arabia there was no water for a distance of five days’ camel march. Aramco sank a well in the center of this arid area and every passing caravan now blesses its name. Around another Aramco-drilled well 5000 camels congregate on a hot summer day.
Besides pumping oil out of Arabia, Aramco pumps money in. A poor nation, Saudi Arabia’s greatest single source of income in the past has been from pilgrims to Mecca. This revenue amounts to about $7,000,000 a year. Aramco’s Arabic payroll alone brings in almost that much. And oil royalties have given the nation a golden shot in the arm. For each barrel, Aramco pays the King 21 cents, the world’s highest royalty. Currently, this amounts to $20,000,000 a year. Within a few years, production will be doubled.
From this revenue, the King is electrifying his capital, Riyadh, Jidda, the “foreigners’ capital,” will have its main street paved, and will get a new water supply from the Wadi Fatima, 50 miles away. Arabia imports most of her food, and the King uses part of his royalties to bring in the rice, sugar, tea, coffee and wheat that his subjects need. He has also bought them cotton goods, trucks and cars. In 1942 there were only 350 motor vehicles in Arabia; today there are more than ten times that many.
Currently, the apple of the King’s eye is his model farm at the oasis of Al Kharj, where there is a fabulous well 300 feet deep and 100 feet across. Even using crude donkey-powered pumps, the Arabs were able to irrigate some 500 acres.
The King asked Aramco to help him develop Al Kharj. The company put in four powerful pumps, capable of production 7000 gallons a minute. Then it built a concrete canal over ten miles long, so the water could irrigate at least 3000 acres. Next it searched America for a good man to boss the project, and found Kenneth J. Edwards, long with the extension service of Texas A&M. Edwards brought five other Texans with him, and went to work on al Khaj. The results are amazing.
Edwards and his assistants found that almost anything will grow in desert soil, despite sandstorms and blowtourch winds, if it is only watered – alfalfa, wheat, tomatoes, carrots, onions, eggplant, melons. They have produced wheat which will go 60 bushels to an acre; the Texas Panhandle five-year average is about 13. They cut alfalfa every 3=20 days; in America we get only five cuttings a year.
It looks like pure magic, and the King thinks so too. Recently he clapped Edwards on the back and said, “You have done a miracle. You must stay her 15 years.” Edwards, who has a three-year contract, thinks he may. The King dropped 100 gold sovereigns (about $1700) in his hand, as a token of appreciation. Then he startled Edwards, a widower, by saying, “But you must have a wife.” Edwards has since heard that Ibn Saud actually plans to give him a large sum for travel expenses to the States – to find a wife.
No visitor leaves the King empty-handed. He has given his Aramco friends noble Arabian horses, gold-mounted swords, daggers, watches and Oriental rugs. He even gave me a gift: a beautiful Persian rug, a gold wrist watch and a set of Arab clothing. Americans, in turn, have brought the King many presents: perhaps the one that delighted him most was a complete American cowboy outfit, with chaps, sombrero, and a gorgeous saddle mounted in gold and silver.
When I saw the King in Riyadh, he told me he wants other model farms all over Arabia. He has asked Edwards to draw up plans for a Ministry of Agriculture, something the country has never had. His second pet project is a railroad from the Persian Gulf to Riyadh, which would cost $32,500,000. The King is constantly prodding Aramco to get it for him.
Nobody knows how big Aramco will grow. It will create new seaports; one sleepy Arab town of 7000 will soon mushroom to 35,000. An Aramco sister company is about to start work on the great trans-Arabian oil pipe line, which will deliver more oil at a greater distance than any other line in the world. It will run 1050 miles, from the Persian Gulf across Saudi Arabia and Transjordan to the Mediterranean Coast.
The line will deliver 330,000 barrels a day. It will be finished by late 1949, by which time Aramco will be producing 500,000 barrels every 24 hours. Some of the extra oil will go to Ras Tanura, where the company had its own 120,000-barrel-a-day refinery. More will go, via an already existing underwater pipe line, to Bahrein (sic) Island, 18 miles away, where yet another Aramco sister company has a large refinery.
The whole project, including aramco, affiliated companies, oil tankers, pip lines, will mean an expenditure of some $1,300,000,000. It is unquestionably the greatest overseas business development ever undertaken by Americans.
This is too big an investment to jeopardize by selfish policies. As Aramco’s President Moore told me: “It’s team play here in Arabia. The country has the oil and the manpower; we have the technical know how and the money, and the trae channels to get petroleum products to market.”
It’s a natural partnership. In fact as well as in theory, American’s new desert song isn’t a solo. It’s a duet.
Condensed from The American Magazine, October 1947
by Gordon Gaskill