Word: aramco
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...took parts of it by force in 1925 from Hussein, the Sherif of Mecca and Abdullah's father; in theory, a theocracy; in fact, an absolute monarchy. Member of the Arab League. Ibn Saud's main income: $100 million yearly in royalties for oil concessions to Aramco. Army: 15,000, plus tribal irregulars. At Dhahran: important U.S. air base...
...with the British activities in Iran are quite accurate, but you actually cannot blame the State Department since they . . . tried to persuade Mr. Attlee during his visit to Washington approximately three months ago to reach an agreement with Iran similar to the agreement reached with King Ibn Saud by Aramco...
...after Iraq's Premier Nuri Al Said warned last week that the oil company might be nationalized, if it did not meet the government's demands for higher royalties, I.P.C. offered Iraq a better deal. The offer: a 50-50 split of the profits -similar to the Aramco-Saudi Arabia arrangement and to the last-minute offer of the Anglo-Iranian Oil Co. which was ignored by Iran's government...
Take a Lesson. Aramco was reasonably happy with the deal. After investing $400 million in Saudi Arabia, it had boosted production 46-fold in a decade, to a rate of 650,000 barrels daily (equal to 11% of all U.S. domestic production). With the prospect of an expanding market, and with its development work largely completed, Aramco recognized that Saudi Arabia was entitled to a bigger share than it had gotten during the years of exploration work...
Moreover, Aramco preferred to make a generous deal now-and win the prospect of a long period of good feeling-rather than to haggle and build up resentment. It had not forgotten that accumulated resentment caused Mexico to expropriate U.S. oil companies in 1938. It also knew that Jersey Standard's generous 1945 settlement with Venezuela had built immense good will. Ibn Saud also was shrewd enough to learn his own lesson from the Mexican affair: Mexico's oil production plummeted after it drove the U.S. companies out. And Ibn Saud, with no one else to turn...