Word: aramco
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Nobody will be following OPEC'S maneuverings in Caracas this week more closely than the executives of a highly secretive oil Goliath that many people have never heard of. The Arabian American Oil Co., or Aramco, is the Delaware-based firm that is jointly owned by Exxon, Mobil, Texaco and Standard Oil Co. of California. Under a geographic concession nearly as large as the state of Oklahoma, Aramco pumps almost all the oil that flows from the Croesus-rich fields of Saudi Arabia. But in Riyadh and Washington alike, Aramco is now feeling heat...
...producer and distributor of some 9.5 million bbl. of crude per day, Aramco is by far the world's largest oil-producing corporation. It is not required to publish financial records because its stock is not publicly traded. But by expert estimates, during the past two years Aramco has paid between $800 million and $900 million annually to its four shareholders, as well as providing them with lucrative tax benefits...
...Aramco got a bonanza from the gap between the $18-per-bbl. price that Saudi Arabia had been charging, vs. the official cartel ceiling of $23.50. In unregulated markets outside the U.S., Aramco's proud parents have been able to sell their gasoline, heating oil and other products for high prices even though these fuels were made from the lowest-cost cartel crude. Largely as a result, third-quarter profits of Exxon, Mobil, Texaco and Socal jumped by anywhere from 73% to 211%. The revenue surge enraged the Saudis; Oil Minister Ahmed Zaki Yamani argues that Aramco...
...Aramco is under attack because of a highly complex tax break. The company pays Saudi Arabia the fixed price for the oil that it extracts and then collects a production fee of 25? per bbl. But 85% of its payments are considered Saudi income taxes, which Aramco's four parents ultimately can use to reduce their U.S. income taxes. Every time Saudi Arabia increases its oil prices, Aramco's local tax payments rise, and so do its benefits under the U.S.'s so-called foreign tax credit. President Carter has vowed to tighten up on the credits...
...Aramco's many critics also complain that the company is altogether too cozy with the Saudi government. Why, they ask, have the Saudis failed to complete their plan to buy out 100% of the company's production facilities? The government announced the nationalization plan five years ago. So far, it has acquired only 60% of Aramco's $2 billion in refineries, pipelines and ports. Has Aramco persuaded the Saudis to go slow, since a full buyout would burden the four corporate shareholders with enormous U.S. capital gains taxes? Nonsense, say Saudi officials. They insist that the final...